Cryptocurrencies

Ethereum ETF on the horizon: approval process and regulations explained


On May 23, 2024, the SEC took a big step by approving the 19b-4 filings. But what exactly does this mean and what steps still need to be taken before large capital can actually invest in these ETFs?

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19b-4 application: the first hurdle

The 19b-4 application is an essential step in the approval process of new listed products such as ETFs. This rule requires publicly traded markets to submit changes to their rules to the SEC before they go into effect. For the Ethereum spot ETF, this means that exchanges such as NYSE, Nasdaq and CBOE have been formally approved to offer this new financial product.

S1 form: the next step

After the approval of the 19b-4 filings, the next important step is the approval of the individual ETF registration statements, also known as the S1 forms. These documents, filed by fund managers such as BlackRock, VanEck and Fidelity, contain detailed information about the ETFs, including financials, risks and the fund’s operations. Only after approval of these S1 forms can the funds and exchanges actually make the ETFs available for sale to the public.

CFTC and the Fit-21 law

It FD also wrote about this interesting development in the regulations surrounding cryptocurrencies. This law will most likely move the oversight of cryptocurrencies from the SEC to the CFTC (Commodity Futures Trading Commission), which oversees commodity trading. This is relevant because the approval of Ethereum ETFs would imply that Ethereum is considered a commodity, as it is an essential part of the infrastructure for moving digital objects.

Expected timeline

While an exact date for the approval of the S1 statements has not been set at this time, SEC Chairman Gary Gensler expects this to happen over the summer. Analysts such as Eric Balchunas of Bloomberg even expect an approval in early July. According to him, the rapid assessment of these applications could be related to the experience that the SEC has gained with the process surrounding the Bitcoin ETFs.

Costs and starting capital

The submitted S1 forms also provide insight into the cost structure of the various ETFs. Every provider wants to be as attractive as possible to attract as many customers as possible in the short term. For example, VanEck charges a fee of 0.20%, while Franklin Templeton charges 0.19%.

BlackRock has not released any specific information at this time, but analysts expect that BlackRock will certainly compete with other providers, bringing their costs below 0.3%. In terms of seed capital, BlackRock has announced an investment of $10 million, while Fidelity has released $4.7 million.

Just have to wait a little longer

With the 19b-4 filings approved and the S1 forms pending, the launch of these ETFs appears to be getting closer. At BLOX we will inform all investors in the coming weeks about all the news surrounding the approval of the ETFs, which are expected to have a major impact on the entire financial world.



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