ETFs
Timing of U.S. Ether ETF Launches Depends on How Quickly Issuers Can Move, SEC Chairman Says
By Hannah Lang and Chris Prentice
(Reuters) – When exchange-traded funds (ETFs) linked to cryptocurrency ether can begin trading depends largely on how quickly issuers respond to questions from the Securities and Exchange Commission United States, its president Gary Gensler said on Wednesday.
The SEC last month approved applications from Nasdaq, CBOE and NYSE to list ether spot ETFs. It’s a surprise victory for the cryptocurrency industry, which expected the SEC to reject the applications after discouraging meetings with the regulator.
The SEC must still approve ETF issuers’ registration statements detailing information provided to investors before they can begin trading. This process typically involves a lot of back-and-forth between ETF issuers and SEC officials.
“These registrants are motivated to respond to the comments they receive, but it’s really up to them how responsive they will be,” he said. Gensler declined to say whether he thought this process would take weeks or months.
Gensler and agency officials had not previously explained why the SEC appeared to be turning around and approving the ether trading filings.
On Wednesday, Gensler said last year’s legal challenge brought by Grayscale Investments, which forced the SEC to approve bitcoin spot ETFs in January, had influenced his thinking about ether products.
Grayscale successfully argued that because the SEC had previously approved ETFs tied to Bitcoin futures, it should also approve Bitcoin spot ETFs, because Bitcoin futures prices are highly correlated to spot prices.
Gensler said the cases are similar, since Ethereum futures have been trading since last year. The SEC staff “looked at these (ether) documents, looked at the different correlations…the correlations are relatively similar to the correlations in the Bitcoin space,” Gensler said.
After the court ruled in favor of Grayscale last year, the SEC approved spot Bitcoin ETFs in January. Gensler, in a statement at the time, acknowledged the court’s decision, adding that he believed approving the products was “the most sustainable path forward.”
The SEC has been rejecting Bitcoin ETFs for a decade. “The courts ruled otherwise. We adapted,” Gensler said.
Nonetheless, he added that he continues to view the crypto space as “rife with fraud, scams and conflicts.”
(Reporting by Hannah Lang and Chris Prentice in New York; editing by Michelle Price and David Gregorio)