The SEC approved spot Ether ETFs through the Trading and Markets Division, bypassing the usual committee vote process.
The United States Securities and Exchange Commission (SEC) recently approved spot Ether exchange-traded funds (ETFs) on May 23. However, this approval process differed significantly from the one used for spot Bitcoin ETFs back in January. While the spot Bitcoin ETFs underwent a voting process by a five-member committee, including SEC Chair Gary Gensler, the spot Ether ETFs received approval from the SEC’s Trading and Markets Division.
Differences in Approval Processes for Bitcoin and Ether ETFs
The spot Bitcoin ETFs were subject to a voting process that included all five members of the SEC committee. This voting process allowed for a transparent decision-making method, involving SEC Chief Gary Gensler’s direct participation. In contrast, the spot Ether ETFs bypassed this voting process entirely. Instead, the approval came directly from the Trading and Markets Division, a move that raised eyebrows in the crypto community.
The SEC approved the 19b-4 filings from several major financial institutions, including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. The official filing stated that the approval was granted by the Division of Trading and Markets, under delegated authority. This process did not involve a public vote by the SEC commissioners.
Industry Reactions and Analysis
The differing approval methods led to various interpretations within the cryptocurrency community. Bloomberg ETF analyst James Seyffart noted that it is common for many approvals to be handled in this manner. According to him, requiring an official vote for every decision would be impractical. He implied that this delegated authority is a standard procedure designed to streamline the approval process.
Despite Seyffart’s explanation, some individuals remain skeptical. Critics argue that this method of approval could conceal potential political motivations behind the decisions. A notable concern is that a commissioner could challenge the decision within a ten-day window, suggesting that the approval process might not be as straightforward as it appears. These critics believe that the delegated authority could obscure the political dynamics at play.
Additionally, some analysts speculate that the SEC’s decision might be influenced by various external factors. These include political pressure, the upcoming elections, and the implementation of environmental, social, and governance (ESG) rules. Such factors could have played a role in the SEC’s choice to use a different approval method for the spot Ether ETFs.
Delayed Trading and Future Implications
Another significant difference between the approval processes of the two crypto ETFs is the timeline for their market debut. The spot Bitcoin ETFs began trading the day after their approval, thanks to the clearance of their S-1 forms. In contrast, spot Ether ETFs might face delays before appearing on exchanges. The ETF filers have not yet received the necessary S-1 SEC registration, which could push back their trading launch by weeks or even months.
This delay in trading adds another layer of complexity to the approval process. It underscores the SEC’s cautious approach towards the introduction of new cryptocurrency investment products. The regulatory body appears to be meticulously evaluating each step to ensure compliance with existing financial regulations and to address potential risks associated with these innovative financial instruments.