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Not so fast! Ethereum ETFs would take longer than expected
Valkyrie executive estimates when spot ether ETFs could be approved in the United States.
By Nickolas Plaza 23 February, 2024 Reading Time: 4 minutes
U.S. Flag Ethereum ETF
There are several Ethereum ETF applications in the hands of the SEC, for review - Composition by CryptoNews. Cagkan / chones / stock.adobe.com ; pngegg.com.
Key Facts:
It could take 1 or 2 years for the SEC to approve these ETFs, McClurg says.
Many other specialists believe that the SEC will give a positive ruling in May 2024.
The fever sparked by bitcoin spot ETFs (BTC) and that infected several companies interested in replicating the financial instrument with ether (ETH), Ethereum's cryptocurrency, may not materialize for at least a year or two. That's according to Steven McClurg, chief investment officer at Valkyrie.
McClurg said, "it's a new asset class, so there's a lot to learn," implying that the possibility of an ether-based fund being viable still needs to be explored.
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He pointed this out in statements to the press, where he added that his point of view is based on the fact that between bitcoin and ether "there are many differences."
"It will take a long time for the SEC to understand what disclosures look like for such a product," so it could take a year to "understand the disclosure aspect" of an ether ETF.
The U.S. Securities and Exchange Commission (SEC) uses the term "disclosures" to refer to information that entities are required to disclose publicly to ensure transparency and provide investors with the data necessary to make informed decisions
Likewise, he mentioned that some of the authorization requests for Ethereum spot ETFs have included the figure of staking, which adds a layer of difficulty for those funds to be approved.
Among the companies that included staking with the ETH they acquire are Ark Invest and Franklin Templeton, whose proposal was submitted to the U.S. Securities and Exchange Commission (SEC) just over a week ago, as reported by CriptoNoticias.
Importantly, Valkyrie is one of the companies holding a bitcoin ETF in the United States and one of the most reputable companies in the exchange-traded fund sector.
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Opinions for and against Ethereum ETFs
McClurg's opinion goes against the grain of other specialists who believe that the SEC will give a positive ruling on ether ETFs in May of this year.
James Seyffart, ETF specialist at Bloomberg Intelligence, has stated on several occasions that the SEC will continue to delay its decision on Ethereum ETFs, however, he believes that the "only important date" is May 23.
This is because the regulatory agency has until that day to give its verdict on the ether ETF proposed by the VanEck company, which is the first of the eight to which it must respond.
SEC Commissioner Hester Peirce has also come out in favor of ETH ETFs and believes that, in this case, the regulatory agency should not repeat the same mistake of falling into delays as happened with bitcoin ETFs. In Peirce's view, the SEC shouldn't need a court to tell them their approach is "arbitrary and capricious" in order to get things right.
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Investment bank JP Morgan agrees with the Valkyrie executive, indicating that it sees "far from being a given" that ETFs based on the cryptocurrency ether will be formally incorporated.
This is because the SEC should first classify ETH as a commodity in an official and unambiguous manner. That's why JP Morgan "doesn't give it even a 50% chance of [Ethereum spot ETFs] being approved."
At the moment, the SEC has delayed several initiatives by companies that have expressed interest in launching an ETF based on Ethereum's native cryptocurrency. Applicants include BlackRock, VanEck, Ark Invest, Franklin Templeton, Grayscale, Invesco, Hashdex and Fidelity. For its part, Valkyrie has not applied for an Ethereum spot ETF.
Source: Cryptonews