The US Securities and Exchange Commission (SEC) is reportedly fast-tracking the launch of Ethereum futures exchange-traded funds (ETFs), with a potential trading debut as early as next week. This comes amid mounting anticipation of a possible US government shutdown.
First Ethereum Futures ETF Could Launch Monday
Bloomberg ETF analyst Eric Balchunas provided significant insight on this development in a tweet: “UPDATE: Hearing the SEC wants to accelerate the launch of Ether futures ETFs (bc they want it off their plate bf shutdown) so they’ve asked the filers to update their docs by Fri pm (no small task to jam into 48hrs, esp for indie issuers), so they can go eff Mon and trade Tue.”
Looking like the SEC is gonna let a bunch #Ethereum futures ETFs go next week potentially
— James Seyffart (@JSeyff) September 28, 2023
His colleague, Bloomberg Intelligence analyst James Seyffart, confirmed the sentiment, noting that it’s “looking like the SEC is gonna let a bunch Ethereum futures ETFs go next week potentially.” Although a recent report from Bloomberg had posited that Ethereum futures ETFs held a 90% chance of launching in October, these latest updates seem to reinforce the immediate timeline.
As per the previous forecast, Valkyrie’s Bitcoin futures ETF (BTF) was set to be the first to incorporate Ethereum exposure on Oct. 3, with a strategy shift that will see the inclusion from Oct. 4. Volatility Shares, another issuer, was anticipated to be the first to exclusively offer Ethereum futures exposure, expected to take effect on Oct. 11, facilitating a launch on Oct. 12. Due to the impending US government shutdown, launch approvals by the SEC could already be pushed forward to next week.
But as Bloomberg notes, out of the 15 Ethereum futures ETFs filed by nine issuers, not all are expected to be given the green light. Notable issuers in the queue encompass VanEck, ProShares, Grayscale, Volatility Shares, Bitwise, Direxion, and Roundhill.
Implications Of The Decision
Scott Johnsson, a finance lawyer at Davis Polk, commented on the SEC’s eleventh-hour approach: “I want everyone to realize Gensler waited until now (giving the issuers 48 hours) because he didn’t want to answer questions about this at the HFSC hearing earlier today. You know, just functional agency things.”
Johnsson highlighted significant ramifications, including the implicit confirmation from Gensler’s SEC that CME ETH futures are not security futures, thereby solidifying Ethereum’s status outside the purview of being a security. The move could lay the groundwork for spot-traded ETFs, as it would mean an approval that SEC Chairman Gensler will not withdraw Bitcoin futures approvals to prevent a spot ETF. Johnson had discussed this possibility in the past.
The looming US government shutdown, set for 12:01 am ET on Oct. 1 if Congress doesn’t finalize a new fiscal year’s funding, threatens to disrupt operations across federal agencies, including financial regulators. This urgency seems to underscore the SEC’s push for expedited ETF approvals.
Though the Ethereum futures ETFs’ potential introduction has stirred the crypto sphere, it’s crucial to note that the excitement surrounding these instruments doesn’t match the fervor seen for their spot-based counterparts. The US has already hosted Bitcoin futures ETFs since 2021.
At press time, the ETH price was at $1,609, showing no reaction to the positive news so far.
Featured image from Shutterstock, chart from TradingView.com
