Gary Gensler Passes the Buck: Timing of Ethereum Spot ETF Launch Depends on Issuers, Not SEC

The U.S. Securities and Exchange Commission (SEC) approved 8 Ethereum spot ETF 19b-4 rule change filings on May 24, but their official launch is still pending the approval of another key document, the S-1 registration statement.

Currently, industry experts have differing views on the timing of the Ethereum spot ETF launch. Discus Fish, founder of Cobo, predicts it could be as early as mid-June, Bloomberg Senior ETF Analyst Eric Balchunas believes it could be by July 4, and JPMorgan estimates it will be before November.

Gensler: The Launch Date of Ethereum Spot ETF Depends on Issuers' Response Speed, Not the SEC

SEC Chairman Gary Gensler told Reuters yesterday (6th) that the official approval of an Ethereum spot ETF will depend on how quickly issuers respond to SEC comments.

“These applicants will voluntarily respond to the comments received, but it actually depends on the speed of their response.”

Although Gensler still refused to disclose whether he believes the launch will take weeks or months, his latest statement shifts the responsibility for approval to the issuers, indicating that the SEC may not delay the approval of the S-1 filing as some fear.

In an interview with CNBC the day before yesterday, he mentioned that the subsequent steps for the SEC to approve the Ethereum spot ETF will still “take some time,” leading some to speculate that Gensler was hinting at a potentially slow approval process for the S-1 registration statement.

Impact of the Grayscale Ruling on SEC’s Decision Regarding Ethereum Spot ETF

A few days before the SEC approved a key document for the Ethereum spot ETF in May, experts unanimously believed that the SEC would not pass it. However, the SEC's stance flipped overnight, surprising the market. Many sources indicated that the SEC’s sudden approval of the 19b-4 was a political decision, driven by the Biden administration’s urgent need for the young cryptocurrency vote.

However, Gensler explained to Reuters that the SEC's approval was influenced by last year’s Grayscale lawsuit. Grayscale won the case, successfully convincing the judge that since the SEC had previously approved ETFs linked to Bitcoin futures, it should also approve spot Bitcoin ETFs, given the high correlation between Bitcoin futures prices and spot prices. This forced the SEC to approve the spot Bitcoin ETF earlier this year and also influenced the agency's view on Ethereum spot ETFs.

Ethereum’s situation is similar. SEC staff “looked at these [Ethereum ETF] documents, looked at various correlations… these correlations are relatively similar to those in the Bitcoin field.”

Gensler No Longer Insists that Almost All Tokens Are Securities?

Additionally, it is worth noting that Gensler appeared to soften his hardline stance on cryptocurrencies during an interview with CNBC the day before yesterday. When asked about the possibility of ETFs for other tokens, he did not emphasize, as he had in the past, that "almost all tokens are securities" except for Bitcoin, but instead said that these tokens “require proper disclosure.” Alexander Grieve, head of government affairs at Paradigm, also noted this shift in Gensler’s stance.

Please note the shift from “all tokens are securities” to “tokens lack proper disclosure.”

Despite this, Gensler still stated in this week's interview that he still believes the crypto field is “rife with fraud, scams, and conflicts.”