SEC's Decision on Ether ETFs: A Strategic Move, Not Political Influence, Says Bernstein Analysts
Summary:
The U.S. securities regulator's approval for spot Ether exchange-traded funds (ETFs) wasn't impulsive but was likely a strategic move, according to Bernstein's analysts. They believe the SEC adopted a practical approach in approving the ETFs and expect a positive price impact for Ether ahead of the launch. Surprised at the last-minute permission, some spot Ether ETF applicants expressed that SEC's radio silence before the approval was interpreted as likely denial. The SEC's approval of 19b-4 applications from eight firms including VanEck, BlackRock, Fidelity, among others, is now awaiting the clearance of the S-1 registration statements which is anticipated to take a few weeks to months.
The green signal from U.S. securities overseer to commence spot Ether (ETH) exchange-traded funds could be a well-calculated move, not an impulse dictated by political influence, as suggested by the Bernstein research and brokerage firm's analysts. Speculation was rife that the shift in the Securities and Exchange Commission's stance toward spot Ether ETFs in May was a strategic move to win the favor of undecided voters in the run-up to November's U.S. elections orchestrated by the Democrats. However, this theory lost some weight after President Joe Biden rejected the SEC’s Staff Accounting Bulletin (SAB) No. 121 repeal bill, as noted in a June 3 report by Bernstein analysts Gautam Chhugani and Mahika Sapra.
According to the analysts, the SEC was cornered when it came to Ether ETFs. Given the fact that it was governed by the same regulations as spot Bitcoin ETFs and had a similar spot-futures correlation and several Ether futures products live on the Chicago Mercantile Exchange, this suggested Ether’s status as a commodity. The SEC seems to have adopted a practical approach to avoid getting entangled in a legal quagmire, they opined. “Undoubtedly, this has resulted in a positive development for the sector,” the analysts from Bernstein added.
The analysts also stated they had spoken with several spot Ether ETF applicants who were caught by surprise with the SEC’s eleventh-hour approval. Given the radio silence from SEC staff leading up to the approval, applicants had prepared themselves for a denial. However, a request to refile the 19b-4s was made less than 24 hours in advance, only four days prior to the approval date.
Like their peers, Bernstein's analysts expect the flows into the spot Ether ETF to be a fraction of those into Bitcoin's, but they believe there could be latent demand from the same groups that fueled Bitcoin's ETF. They predict a positive price impact for Ether leading up to the launch.
The SEC granted the green light to 19b-4 applications from firms like VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise to roll out spot Ether ETFs on May 23. Now, these eight approved issuers are holding their breath for the S-1 registration statements to be cleared by the SEC, a process that could span from a few weeks to a few months.
Published At
6/4/2024 7:39:55 AM
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