Grayscale CLO expects SEC endorsement for Ether ETFs by May
Craig Salm, Grayscale’s Chief Legal Officer (CLO), is optimistic that the Securities and Exchange Commission (SEC) will approve spot Ether (ETH) exchange-traded funds (ETFs) by May 2024. Salm’s optimism is based on the SEC’s previous meetings with Grayscale before approving Bitcoin ETFs. These meetings discussed important operational aspects such as creation/redemption procedures, cash versus in-kind contributions, authorized participants (APs), liquidity providers (LPs), and custody issues.
Salm argues that the case for Ethereum ETFs is similar to that of Bitcoin ETFs, as many of the previously resolved issues for Bitcoin ETFs are directly applicable to Ethereum ETFs. The main difference between the two products is the underlying assets. Salm believes that the SEC has already engaged and issuers have less to engage on this time.
Salm also points to the recent approval of Ether Futures ETFs and their classification as commodity futures as another argument for a favorable regulatory outcome. He believes that the high correlation between futures and spot products strengthens the case for approving spot Ether ETFs.
Other industry insiders, such as Paul Grewal, the Chief Legal Officer for Coinbase, have echoed these sentiments. Grewal argued that there was “no good reason” for the SEC to deny ETH ETP applications, based on statements from several SEC officials who stated that ETH was not a security measure.
However, not all industry observers share Salm’s optimism. Bloomberg ETF analysts Eric Balchunas and James Seyffart have expressed concerns over the SEC’s “lack of engagement,” reducing their expectations for an approved spot Ether ETF in May to a pessimistic 25%. Balchunas perceives this stance as intentional rather than mere procrastination.
Currently, the SEC has received filings from various companies including BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. The deadline for VanECK’s application is set for May 23.
