Two US Firms Discontinue Ethereum ETF Application Process
Chances of crypto ETFs getting approved in the US are growing thinner as applications for Ethereum ETFs were withdrawn on Friday by two US firms. Asset management firms, VanEck and Proshares had only made filings for ether-based ETFs on Wednesday before announcing that they would both discontinue the applications process. Industry stakeholders have speculated that both firms must have been dissuaded by the US SEC, the regulatory body in charge of ETFs.
Currently, US Securities and Exchange Commission has more than a dozen crypto ETFs filings before it, mostly comprising Bitcoin ETF applications. None of these is yet to be approved by the commission. VanEck and Proshares’ Ether-based ETF filings are based on Ethereum Futures Contracts including financial offerings and investment products that offer institutional investors a less risky exposure to the largest altcoin.
VanEck and Proshares Drop Baton on Ethereum ETFs, No Reasons Given
A statement released by VanEck declared that the Trust has decided not to proceed with the ETF offering at this time. A similar statement issued by Proshares also noted they were withdrawing from the registration process. Although both asset managers did not give concrete explanations for the withdrawals, it is not difficult to predict that the body language of the US SEC as regards crypto ETFs must have contributed to it.
Conversations surrounding crypto ETFs in the US have featured divergent views. Of particular significance is the comments made by Greg King, CEO of Osprey Funds, an investment arm of Osprey, also an asset manager. According to King, the body language and rhetorics of regulators in the US concerning crypto ETFs indicated that such innovation was very much unlikely this year. King added that the US SEC had a lot on its plate already to give much consideration to the ETF filings. As such, mid-2022 is potentially a suitable timeline for crypto ETFs.
US SEC Unbothered As ETF Pressure Mounts
Meanwhile, Bitcoin ETFs have been a major talking point among investors with the likes of Mike Novogratz-owned Galaxy Digital mounting pressure on US regulators to approve pending filings. Galaxy Digital already submitted another Bitcoin Futures ETF application to the US SEC last week under the 1940 Act that clearly outlines provisions stating requirements for ETF filings.
Given that the Act also seeks to protect investors, Galaxy Digital filed its latest Bitcoin ETF, which is its fifth, under the Act’s umbrella. Chairman of the US SEC, Gary Gensler also considers the 1940 Act as a ‘safe haven’ for investors. Thus, it is more likely that the commission will give utmost attention to the application unlike others.
Expectations of institutional investors are still high, even if the US SEC is not forthcoming with a positive response. The US SEC has always brought to the fore the risks cryptocurrencies posed to investors, while stating that regulating the space is a necessity. Despite lagging behind, US regulators are more bothered about getting it right than catching up with North American counterpart, Canada, which already boasts of three Bitcoin ETFs.
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