8 months ago
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Grayscale’s chief legal officer (CLO), Craig Salm, expects the SEC to approve spot Ether (ETH) exchange-traded funds (ETFs) by May 2024.
According to Salm, the optimism stems from the SEC’s meetings with Grayscale prior to the approval of Bitcoin ETFs. The meetings covered critical operational aspects such as creation/redemption procedures, cash versus in-kind contributions, authorized participants (APs), liquidity providers (LPs), and custody issues.
Based on these interactions, Salm asserts that the case for Ethereum ETFs is quite similar to that of Bitcoin ETFs. His argument mainly centered on the fact that many of the previously resolved issues for Bitcoin ETFs are directly applicable to Ethereum ETFs. That’s because the primary difference between the two products is the underlying assets.
“In many ways, the SEC already has engaged and issuers simply have less to engage on this time,” Salm wrote.
Salm also recalled the recent approval of Ether Futures ETFs and their classification as commodity futures. According to the Grayscale CLO, this was another argument for a favorable regulatory outcome.
He believes the high correlation between futures and spot products strengthens the case for the latter’s approval.
Further, Salm highlighted that these sentiments have already been echoed by other industry insiders like Paul Grewal. The chief legal officer for Coinbase has argued that there was “no good reason” for the SEC to deny ETH ETP applications. His stance was based on statements from several SEC officials who claimed that ETH was not a security measure.
“We hope they won’t try to invent one by questioning the long established regulatory status of ETH, which the SEC has repeatedly endorsed. That’s not how the law works,” Grewal wrote back then.
However, not all industry observers share Salm’s optimism.
Bloomberg ETF analysts Eric Balchunas and James Seyffart have voiced concerns over the SEC’s “lack of engagement,” reducing their expectations for an approved spot Ether ETF in May to a pessimistic 25%. Balchunas perceives this stance as intentional rather than mere “procrastination.”
As of now, the SEC has received filings from BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. The deadline for VanECK’s application is set for May 23.
