Ether ETF Approvals Will ‘Take Time’ — Gensler

Gary Gensler, the chairman of the United States Securities and Exchange Commission (SEC), has indicated the potential for delays in granting final approvals for asset managers eager to offer spot Ether (ETH) exchange-traded funds (ETFs) on exchanges. During an interview on June 5 with CNBC, Gensler mentioned that the SEC’s next steps regarding these spot Ether ETFs will “take some time.” This implies that the commission may be slow or hesitant in signing off on the S-1 registration statements needed for these funds.

On May 23, the SEC took preliminary steps by approving 19b-4 filings from several major financial institutions, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. Gensler suggested that the final go-ahead for listing and trading these ETFs on U.S. exchanges could still be months away. This delay mirrors the slow and careful approach the SEC has taken in handling cryptocurrency-related products.

During the same interview, Gensler highlighted that some cryptocurrency firms are engaging in practices that wouldn’t be permitted for traditional exchanges under current laws. This statement reinforces the idea that the SEC will maintain its cautious stance and continue its rigorous enforcement actions against such firms. Notably, the SEC has already initiated legal proceedings against major players like Ripple, Coinbase, Binance, and Kraken.

Adding another layer to the situation, the SEC recently had to close one of its regional offices. This comes following a court order mandating the commission to pay $1.8 million due to what was described as “bad faith conduct” in court from a Utah judge. This incident could potentially affect the SEC’s actions and timelines concerning other regulatory matters, including the spot Ether ETFs.

Despite the suggestion of a delay, the SEC has not been entirely idle regarding the approval process for these funds. The initial approvals for Ether ETFs came five months after the SEC gave the green light to several spot Bitcoin (BTC) ETF applications, a landmark moment in the industry. This shows that the commission is at least open to considering these new financial instruments, even if the final steps may be slow.

Prior to Gensler’s recent remarks, Eric Balchunas, an analyst at Bloomberg specializing in ETFs, had predicted that spot Ether ETFs might be launched by July 4. This optimistic forecast now seems less likely given Gensler’s cautious tone and the inherent complexities of the approval process.

It’s notable that the SEC’s Trading and Markets Division approved the spot Ether ETFs, rather than the five commissioners voting on them. This procedural detail may also factor into the timeline and the eventual outcome of these ETFs gaining approval for listing and trading.

Gensler’s term as SEC chairman is expected to last until 2026, so his cautious and regulatory-focused philosophy may continue to shape the commission’s actions in the cryptocurrency and ETF space for the next few years. SEC Commissioner Caroline Crenshaw’s term officially concluded on June 5. As of now, U.S. President Joe Biden has yet to announce whether Crenshaw will be reappointed or if a new nominee will be introduced.

While the SEC is moving forward with considerations for spot Ether ETFs, final approvals seem to be a distant prospect, influenced by a complex interplay of legal, regulatory, and procedural factors.