Ethereum ETF Dream On Hold: SEC Thumbs Down Applications (Again)

July 1, 2024

Ethereum enthusiasts were cruising down the information superhighway towards a July 4th fireworks celebration of a different kind: the launch of the first spot Ethereum ETF.

Investor excitement was dampened when the US Securities and Exchange Commission unexpectedly sent back applicants’ proposals, delaying the much-anticipated debut.

Missed Exit: Ethereum ETF July Launch Goes Up In Smoke

The news came as a shock to many, as market watchers and analysts alike had confidently predicted a July launch, with some even suggesting a celebratory trade on Independence Day.

Bloomberg ETF analysts Eric Balchunas and James Seyffart were among those waving the checkered flag a little too early. Their prediction of a July 2nd debut went kaput after the SEC decided to put the brakes on the process.

Unfort think we gonna have to push back our over/under till after holiday. Sounds like SEC took extra time to get back to ppl this wk (altho again very light tweaks) and from what I hear next wk is dead bc holiday = July 8th the process resumes and soon after that they’ll launch… https://t.co/0ZQR7yiBLt

— Eric Balchunas (@EricBalchunas) June 28, 2024

Insiders claim that the SEC has delayed the anticipated debut date by requesting changes to the S-1 documents that issuers have submitted.

Think of the S-1 Form as a company’s passport to going public. This first step in the rigorous registration process with the SEC provides all the necessary details for the regulator to examine the entity before it offers shares to the public for the first time.

Now, this unexpected diversion raises serious concerns about the schedule as a whole. Although there are others who anticipate the green light by July 8th, the impending US holiday probably adds another layer of wrinkle.

Uncharted Territory: The SEC Takes The Wheel

For issuers and investors alike, the absence of a clear timetable is a major source of discomfort. In contrast to the earlier 19b-4 forms, which required the SEC to make a decision within a certain amount of time, the S-1 filing process allows the regulatory body as much time as it needs. This essentially gives the SEC full control, enabling them to make changes requests and perform a comprehensive assessment without feeling pressed for time.

While SEC boss Gary Gensler has previously hinted at approvals “sometime this summer,” his comments haven’t offered much solace to the jittery market. The recent snafu with the S-1 forms indicates that even a summer launch might be overly optimistic.

The Road Ahead

The SEC’s recent actions have thrown the timeline into disarray, leaving investors and issuers in a state of limbo. While approval might still happen sometime this summer, the lack of clarity paints a picture of a bumpy ride ahead for these highly anticipated investment vehicles.

Featured image from Pexels, chart from TradingView