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The big thing for Ethereum ETFs was getting over the ‘mountain of possible approval’ says expert

The BlockThe Block2024/05/21 16:28
By:Tim Copeland

Bloomberg ETF analyst Eric Balchunas said that the SEC’s engagement with prospective Ethereum ETF issuers was a complete 180 turn.He explained what he’s looking for next in terms of filings and how he reckons the approval process will play out.

The SEC’s sudden engagement with prospective spot Ethereum ETH +21.35% ETF issuers has marked a huge change in the outlook for potential approvals, according to Bloomberg ETF analyst Eric Balchunas. 

“At this point, just the news that the SEC is engaged is the real heart of the matter. The 180, as we're calling it,” he told The Block in an interview.

The next thing is to see when the 19b-4 forms will be approved and, after that, when the S-1 registration statements will go into effect, he said. He noted that the latter could take longer than normal since this is such a unique situation. After both of those take place, trading could begin.

“We don't know exactly when that will be, but all of these are logistics. To go over that mountain of possible approval is the big thing. Now it just comes down to logistics and legal documents and stuff like that, which, as far as I heard, everyone was caught flat-footed yesterday,” he said. “And so I don't know how fast the fast track is, but it's going to be probably a mad scramble for the next couple days, maybe even weeks — depends on the S-1.”

Ahead of the spot Bitcoin ETF approvals, the SEC engaged with prospective issuers for weeks before finalizing the 19b-4 and S-1 forms on the same day. However, this time around, the SEC only started engaging with prospective issuers just days before a key deadline of May 23, when it has to make a final decision on the VanEck Ethereum ETF. While this raises the question of whether there’s enough time to get the applications ready, Balchunas said it should be much more streamlined.

“It's a big help that they just went through Bitcoin a couple of months ago because there's going to be a lot of cut and paste. And then I didn't hear anything that told me that the comments were that crazy, that it would take longer than overnight. So that's got to be a good sign,” he said.

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Will the Ethereum ETFs be as prepared?

With the Bitcoin ETF approvals, issuers like BlackRock started its spot Bitcoin ETF with $10 million of seed capital. Plus, it reportedly had billions of dollars in capital lined up, which was seen once the ETFs started trading. However, Balchunas doubted that this would be the case this time around, partly because the SEC’s engagement was so last minute.

“My guess is they don't because it's off guard,” he said. “During the Bitcoin ETF process, because the SEC was so engaged with them, everybody was pretty optimistic — so they had time. And that is not the case here now.” However, Balchunas noted that BlackRock is such a big deal that he wouldn’t discount them from getting something done quickly.

He also reiterated his view that Ethereum ETFs may attract lower demand than the Bitcoin ETFs did. “I think for people who are really into this, they probably already own it, right? And for the casual tourist types, I think a lot of them are probably satisfied with Bitcoin. It's the one they know the best,” he said.

Balchunas estimated that the Ethereum ETFs may get 10 to 15% of the assets that their Bitcoin counterparts received. “That would put them at like $5 to $8 billion, which, again, for any normal launch in the first couple of years. That's pretty good.”


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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