The start of trading for Ethereum-related cryptocurrency exchange-traded funds (ETFs) will mainly depend on how quickly issuers respond to inquiries from the U.S. Securities and Exchange Commission (SEC), Chairman Gary Gensler said on Wednesday.
Last month, the SEC approved listing applications for spot Ethereum ETFs submitted by Nasdaq, the Chicago Board Options Exchange (CBOE), and the New York Stock Exchange (NYSE). This was an unexpected victory for the cryptocurrency industry, which had originally expected the SEC to reject these applications following several unfavorable meetings with regulators.
Before these ETFs can start trading, the SEC still needs to approve the issuers' registration statements, detailing investor disclosures. This process typically involves multiple communications between ETF issuers and SEC officials.
Gensler stated, "These applicants will respond spontaneously to the comments they receive, but the speed of their responses is up to them." He declined to reveal whether this process would take weeks or months.
Previously, Gensler and SEC officials did not comment on why the SEC suddenly changed its stance to approve Ethereum trading applications.
On Wednesday, Gensler said that a court challenge filed last year by Grayscale Investments forced the SEC to approve a spot Bitcoin ETF in January, which influenced their view on Ethereum products.
Grayscale successfully argued that since the SEC had approved ETFs related to Bitcoin futures, they should also approve a spot Bitcoin ETF because Bitcoin futures prices are closely related to spot prices.
Gensler stated that the cases are very similar because Ethereum futures have been trading since last year. SEC staff "reviewed these (Ethereum) applications, examined various correlations... the correlations are relatively similar to those in the Bitcoin arena," Gensler said.
After the court ruled in favor of Grayscale last year, the SEC approved the spot Bitcoin ETF in January. In a statement at the time, Gensler acknowledged the court's decision and said he believed approving these products was "the most sustainable path forward."
The SEC had rejected Bitcoin ETF applications for a decade. "The court ruled otherwise. We adapted," Gensler said.
Nevertheless, he added that he still believes the cryptocurrency sector is "rife with fraud, scams, and conflicts of interest."
