The timing of when exchange-traded funds (ETFs) tied to the cryptocurrency ether can begin trading largely depends on how quickly issuers respond to inquiries from the U.S. Securities and Exchange Commission, Chairman Gary Gensler said on Wednesday.
The SEC last month approved applications from Nasdaq, CBOE and NYSE to list spot ether ETFs. It was a surprise victory for the cryptocurrency industry, which had expected the SEC to reject the applications after discouraging meetings with the regulator.
The SEC still must approve ETF issuers’ registration statements, which detail investor disclosures, before they can begin trading. That process typically involves a lot of back and forth between ETF issuers and SEC officials.
“These registrants are self-motivated to respond to the comments that they get, but it’s really up to them how responsive they are,” he said. Gensler declined to say whether he thought the process would take weeks or months.
Gensler and agency officials had previously declined to comment on why the SEC appeared to do an about-face and approve the Ether Exchange’s documents.
Gensler said Wednesday that the lawsuit filed by Grayscale Investments last year that forced the SEC to approve bitcoin ETFs in January influenced the SEC’s view of ether products.
Grayscale successfully argued that because the SEC had previously approved ETFs tied to bitcoin futures, it should also approve spot bitcoin ETFs, since bitcoin futures prices are closely tied to spot prices.
Gensler said the cases are similar, as ethereum futures have been trading since last year. SEC staff “looked at these (ether) filings, looked at the different correlations … the correlations are relatively similar to the correlations in the bitcoin space,” Gensler said.
After the court ruled in Grayscale’s favor last year, the SEC approved spot bitcoin ETFs in January. Gensler acknowledged the court’s decision in a statement at the time, adding that it believed approving the products was “the most sustainable path forward.”
The SEC had rejected bitcoin ETFs for a decade. “The courts ruled otherwise. We changed it,” Gensler said.
Still, he said he still sees the crypto world as “full of fraud, scams and conflict.”
© Thomson Reuters 2024
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