Excitement is building in the crypto industry as a newly approved Spot Ether (ETH) exchange-traded fund (ETF) could launch as early as mid-June, but the rollout depends on how quickly approved clients amend their S-1 registration statements and the next round of feedback they receive from the Securities and Exchange Commission (SEC).
Bloomberg ETF analyst James Seifert suggested that S-1 approval could be seen within a few weeks, but acknowledged that the process could take several months. Fellow analyst Eric Batunis, however, remains optimistic, predicting a mid-June launch. He noted that the SEC's feedback process took about two weeks to find a Bitcoin ETF.
Rapid movement of applicants
Following approval of their 19b-4 filings, the next step for these funds is to secure approval of their S-1 registration statements, which are essential for them to begin trading. VanEck quickly amended its S-1 following 19b-4 approval, and other filers are expected to follow suit as soon as possible.
However, there is a potential challenge: The SEC's Trading and Markets Division approved the application under “delegated authority,” meaning one of the five SEC commissioners could challenge the decision again within the next 10 days. However, digital asset lawyer Joe Calasalle noted that such a scenario is unlikely, since the decision could not have been passed without the unanimous consent of all commissioners.
Market expectations and analyst forecasts
Seifert also predicts that if the S-1 is approved, the Spot Ethereum ETF could attract 20% of the investment flows recorded by the Bitcoin ETF. However, Balchunas expects a more conservative 10-15% flow. The Bitcoin ETF has attracted $13.3 billion in net inflows in about four and a half months since its launch. So if the Spot Ethereum ETF is successful in capturing 20% of that, it could record a staggering $2.66 billion in the same period. This possibility has piqued the interest of investors looking to diversify their crypto assets.
Read more: Ethereum braces for 60% surge as spot ETF approval looms: QCP Report
The Future of Grayscale's Ethereum Trust
Despite the optimism, concerns remain over the impact of these new ETFs on existing products like the Grayscale Ethereum Trust, which currently holds more than $11.3 billion. Additionally, the trust could experience significant outflows as investors may favor the new ETFs.
Thus far, Grayscale's Bitcoin Trust has experienced outflows when it was converted into ETF format. Major players such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Bitwise and Invesco Galaxy received regulatory approval on Thursday, May 23, highlighting a strong lineup currently poised to meet market demand. However, Hashdex was the only applicant not approved on that day, highlighting the competition and complexity of the ETF approval process.
Also see: Ethereum ETF S-1 Discussions Begin: What to Expect Going Forward
