U.S. SEC Can Approve 19b-4 for Spot Ethereum ETF, What It Means?

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As a crypto investor with some experience in the market, I’m keeping a close eye on the upcoming decision from the SEC regarding the approval of spot Ethereum ETFs. The potential impact on Ethereum and the broader crypto market is significant, as it could lead to increased mainstream adoption and a more regulated investment environment for cryptocurrencies.

With the approval process for Ethereum exchange-traded funds (ETFs) approaching a decision point, Nate Geraci, President of The ETF Store, expresses his perspectives on potential developments this week. For Ethereum ETFs to begin trading on major exchanges like Wall Street, both the SEC-mandated 19b-4 rule changes and S-1 registration statements must be approved.

Spot Ethereum ETH Approval

Ethereum Exchange-Traded Funds (ETFs) will be listed and traded on stock exchanges in a manner akin to stocks, with Ether serving as their underlying asset. However, they can only begin trading if they receive approval from the Securities and Exchange Commission (SEC) for both their 19b-4 applications and S-1 filings.

SEC decision deadline this week on spot eth ETFs…

The Secur Exchange needs to give its approval for both the exchange rules modifications (19b-4s) and the registration statements (S-1s) prior to the commencement of an ETF’s operation.

It is theoretically feasible for the Securities and Exchange Commission (SEC) to grant 19b-4 permissions first, followed by a deliberate pacing of S-1 filings. Despite the reported disengagement here, this sequence remains an option.

— Nate Geraci (@NateGeraci) May 19, 2024

When a national securities exchange like the NYSE or Nasdaq intends to propose rule changes or introduce new products related to Ethereum ETFs, they are required to submit a filing to the Securities and Exchange Commission (SEC). In simpler terms, the exchanges are asking for the SEC’s approval to add these new Ethereum-based financial instruments to their trading platforms.

The S-1 is a crucial registration form that new securities must submit for public offering. It contains comprehensive details about the company’s business, financial situation, and management team for both the Securities and Exchange Commission (SEC) and prospective investors. For exchange-traded funds (ETFs), specifically those tracking Ethereum, this document discloses the fund structure, its management, and the strategies it will employ to mimic Ethereum’s performance.

To legally offer ETFs for sale to the public, both the 19b-4 filings and S-1 registration forms need the SEC’s approval. The regulatory body usually has a set period of 45 days, with the possibility of extending it up to 240 days, to make an initial decision on the 19b-4 applications. Approval for these filings enables ETFs to be listed on exchanges. However, without securing approval for the S-1 forms, it remains illegal to sell these ETFs to investors.

Chances of A Delay

If the U.S. Securities and Exchange Commission (SEC) gives the green light to 19b-4 applications, it may still proceed at a deliberate pace when processing S-1 filings. Consequently, the review and approval of these documents could take an extended period. Moreover, the muted response from issuers during SEC engagements underscores the possibility of a more meticulous approach by the regulator due to the intricacies and potential risks associated with crypto products.

As a researcher studying the cryptocurrency market, I can’t stress enough the significance of Ethereum ETFs (Exchange-Traded Funds) approval. Granting the go-ahead would likely spur widespread acceptance of Ethereum and create a more controlled investment climate for those drawn to digital currencies. Conversely, a postponement or rejection might suggest persistent regulatory hurdles regarding the reliability and safety of cryptocurrency investments.

Over the past weekend, I’ve noticed that Ethereum’s price has made a partial recovery, bouncing back up to around $3,100 as the decision date draws near.

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2024-05-20 07:56