Grayscale CLO Foresees SEC Endorsement for Ether ETFs in May
Craig Salm, the Chief Legal Officer (CLO) of Grayscale, anticipates that the Securities and Exchange Commission (SEC) will grant approval for spot Ether (ETH) exchange-traded funds (ETFs) by May 2024.
Salm’s optimism is rooted in the SEC’s previous discussions with Grayscale before approving Bitcoin ETFs. These discussions covered crucial operational aspects such as creation and redemption procedures, cash versus in-kind contributions, authorized participants (APs), liquidity providers (LPs), and custody issues.
Based on these conversations, Salm argues that the case for Ethereum ETFs closely resembles that of Bitcoin ETFs. His main point is that many of the issues already resolved for Bitcoin ETFs are directly applicable to Ethereum ETFs. The main difference between the two products is the underlying assets.
“In many ways, the SEC has already engaged, and issuers simply have less to engage on this time,” Salm stated.
Salm also references the recent approval of Ether Futures ETFs and their classification as commodity futures. According to Salm, this further supports the argument for a favorable regulatory outcome. The high correlation between futures and spot products strengthens the case for approving spot Ether ETFs.
Salm points out that other industry insiders, like Paul Grewal, have echoed these sentiments. Grewal, the Chief Legal Officer for Coinbase, argues that there is “no good reason” for the SEC to deny ETH ETP applications. He bases this stance on statements from several SEC officials who have stated that ETH is not a security.
However, not all industry observers share Salm’s optimism. Bloomberg ETF analysts Eric Balchunas and James Seyffart express concerns over the SEC’s “lack of engagement,” leading them to reduce their expectations for an approved spot Ether ETF in May to a pessimistic 25%. Balchunas sees this stance as intentional rather than mere procrastination.
Currently, the SEC has received filings from BlackRock, VanEck, ARK 21Shares, Fidelity, Invesco Galaxy, Grayscale, Franklin Templeton, and Hashdex. The deadline for VanECK’s application is set for May 23.
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