Spot ether ETFs likely to begin trading July 23, industry sources say
Updates with industry analysis, context
By Suzanne McGee and Hannah Lang
July 15 (Reuters) -The U.S. Securities and Exchange Commission has given preliminary approval to at least three of the eight asset managers hoping to launch exchange-traded funds tied to the spot price of ether to begin trading next Tuesday, three industry sources said.
The approval hinges on applicants submitting final offering documents to regulators before the end of this week, the sources said. One said that all eight are expected to launch simultaneously.
A spokesperson for the SEC said the agency does not comment on individual filings.
Following the launch of nine U.S. spot bitcoin ETFs in January, the ether products would mark another major win for the cryptocurrency industry's campaign to push digital assets into the mainstream. Ether is the world's second-largest cryptocurrency after bitcoin.
BlackRock BLK.N, VanEck and Franklin Templeton BEN.N are among the eight asset managers whose applications are likely to be greenlit by the SEC next Monday afternoon, July 22, with trading in the products expected to begin the next day, according to the industry sources, who spoke on background due to the confidentiality of the discussion with the SEC.
In trading late Monday afternoon, ether changed hands at $3,433.07, up 7.1% on the day and giving the cryptocurrency a 14.4% gain for the last week.
January's launch of spot ETFs tracking the price of bitcoin was the culmination of a decade-long tussle with the SEC, which had rejected the products due to market manipulation concerns. The agency was forced to approve the ETFs, warning that the products were highly risky, after losing a court challenge brought by digital asset manager Grayscale Investments.
The launch was one of the most successful in the ETF market's history, with the nine new products drawing some $6.6 billion in assets in their first three weeks of trading, Morningstar Direct data showed. As of the end of June, the ETFs had attracted a net $33.1 billion in inflows.
Martin Leinweber, digital asset product strategist at MarketVector Indexes, said he expects much more modest inflows into the new ether ETFs and more volatility in ether's price due to its smaller market size and trading volumes relative to bitcoin, which reached a new high after the ETFs were approved.
The market value of bitcoin is just over $1 trillion compared with ether's $359 billion, according to CoinGecko.
"It's important to temper expectations," Leinweber said.
While estimates on demand vary widely, Galaxy Research - whose sister company Galaxy Asset Management has an ether ETF with Invesco IVZ.N - has projected that the ether products could attract monthly inflows of $1 billion.
Thomas Perfumo, head of strategy at crypto exchange Kraken, said given ether's smaller market size, inflows need not reach the level of bitcoin ETFs to be considered successful.
Issuers began filing for the ether ETFs in September. Executives initially had low hopes that the SEC would greenlight the products after discouraging meetings with officials.
But the agency surprised the industry in May when it approved rule changes required for exchanges to list the products, the first of two key regulatory hurdles.
SEC Chair Gary Gensler last month told Reuters the Grayscale ruling had influenced his thinking on approving the ether products, because the underlying market circumstances were similar.
Reporting by Suzanne McGee; Editing by Richard Chang and Stephen Coates
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
