The company’s chief legal officer explained why the lack of active consultation with the SEC should not be a cause for concern

Grayscale allows the possibility of spot ETH ETFs to be approved in the US this May

26.03.2024 - 09:15

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3 min

What’s new? Craig Salm, chief legal officer at investment firm Grayscale, has expressed confidence that the US Securities and Exchange Commission (SEC) will approve Ethereum-based spot exchange-traded funds (ETFs) this May. Earlier, industry experts, including Bloomberg analyst Eric Balchunas, questioned whether the product would be allowed to enter the market in the near term because officials are not giving feedback to ETH ETF issuers.

Source: Twitter.com

What else is known? Analysts noted that the ETH ETF situation is significantly different from the one that preceded the launch of spot bitcoin funds in January. Back then, officials were actively engaging with issuers and advising them to make various clarifications to the applications about how the products would function to increase the likelihood of approval.

Eventually, ten BTC ETFs were admitted to the market on January 11, including GBTC from Grayscale. GBTC, unlike other funds, is not new: previously it functioned as a bitcoin trust without the possibility of redeeming units, but in January it was converted into an ETF. This fact, coupled with the highest management fee among issuers (1,5%), has resulted in GBTC’s outflows reaching $14,15 billion since trading began, while other issuers are showing positive results.

While GBTC remains the largest bitcoin ETF by assets under management (AUM) at $24,33 billion, its closest competitor is IBIT from the world’s largest investment firm BlackRock ($17,24 billion).

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Commenting on the analysts’ viewpoint, Craig Salm confirmed that in the months leading up to the approval of the BTC ETF, issuers did engage positively and constructively with SEC officials, discussing details of unit issuance and redemption procedures, custody of the underlying assets, and cash and in-kind redemption features. However, in the case of the ETH ETF, such interaction would be redundant, as many issues have already been clarified when discussing the BTC ETF.

As such, the lawyer suggested that Ethereum funds could be approved as early as May. “Investors want and deserve access to Ethereum in the form of a spot Ethereum ETF and Grayscale believes the case is just as strong as it was for spot Bitcoin ETFs. We look forward to engaging with the Commission on these important products,” concluded Salm.

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