CoinDesk reports that the anticipated launch of the U.S. spot Ethereum exchange-traded fund (ETF), initially slated for July 2nd, has been delayed by the U.S. Securities and Exchange Commission (SEC).
On June 29th, according to The Block, the SEC returned the S-1 form to the prospective Ethereum ETF issuer with minor comments, requesting these to be addressed by July 8th and resubmitted.
Sources indicate that this return does not constitute a final filing, indicating at least one more round of submissions before the ETF can commence trading.
SEC’s Delay Process
The SEC has commented on the S-1 form and requested resubmission by July 8th. Per Balchunas, this new timeline suggests that the launch of the spot Ethereum ETF might be delayed until at least mid to late July.
Nate Geraci, President of ETF Store, noted that the previous round of S-1 revisions was relatively minor, expecting SEC approval for issuers to trade within 14-21 days. While exact timing remains uncertain, the SEC has hinted at a potential summer launch this year.
Earlier in June, due to the SEC staff’s lack of significant comments on the ETF applicant’s S-1 filing, Balchunas predicted a July launch, which now seems improbable.
Two-Step Process for Ethereum ETF
Approval of the S-1 form constitutes the second part of the two-step process required for ETF listing. The first part involves the approval of Form 19b-4 by the issuer in May. On May 23rd, the SEC approved Form 19b-4 for eight ETF bidders.
Unlike Form 19b-4, the S-1 form is not bound by specific deadlines, allowing issuers to rely on the SEC’s schedule for review.
SEC has approved a rule change allowing major issuers, including BlackRock, Fidelity, 21Shares, Grayscale, Franklin Templeton, VanEck, iShares, and Invesco, to participate in this process. Additionally, issuers like VanEck have submitted Form 8-A, preparing for exchange listing before July 8th.
Despite earlier reports suggesting a possible debut of July 4th, this is now unlikely. Issuers remain uncertain about the ETF’s exact listing date until the final deadline for submission of documents by the SEC.
SEC attributes the responsibility for listing the Ethereum ETF to the applicants, claiming the entire process depends on their response time.
Eric Balchunas, an ETF analyst at Bloomberg, stated on X platform, “It looks like we’ll have to push back expectations for the spot Ethereum ETF’s launch until after the holidays. SEC spent more time responding this week (though just some very minor tweaks), and from what I’m hearing, next week will be slow due to the holidays, with approvals expected to resume on July 8th, and then they’ll launch soon after.”
SEC Chairman Gary Gensler recently stated that the earliest anticipated launch for the spot Ethereum ETF could be seen in September.
Significance of Ethereum ETF Listing
Galaxy Research stated in a report that once approved for trading, monthly net inflows into Ethereum spot ETFs could reach $1 billion.
They predict that the net inflow volume of the first five months of an ETH ETF will reach 20-50% of the BTC ETF net inflow volume, with Galaxy aiming for 30%, implying monthly net inflows of $1 billion.
Simultaneously, Galaxy cautioned that demand for spot Ethereum ETFs may be restricted due to the lack of staking rewards. Outflows from Grayscale Ethereum Trust (ETHE) could also hamper inflows into the Ethereum ETF, with Galaxy estimating negative outflows of approximately 319,000 ETH or $1.1 billion per month.
Bitwise believes that $15 billion in inflows over the next 18 months would be a good start. The institution sees ETH as a compelling asset, driving the most universal blockchain globally. Even $15 billion in net new demand would have a significant impact on the Ethereum market.
