Key Points
- The US SEC’s sudden shift on Ethereum ETF approval has led Bloomberg analysts to raise the chances of approval from 25% to 75%.
- The SEC’s decision to request accelerated updates on 19b-4 filings indicates an intent to approve, but final approval may still take time.
The US Securities and Exchange Commission (SEC) has reportedly made an unexpected U-turn on the approval of an Ethereum [ETH] ETF. This has prompted Bloomberg analysts to raise the odds of approval from 25% to 75%.
SEC’s Change of Stance
Bloomberg ETF analyst Eric Balchunas suggests that the approval has become a ‘political issue’, possibly influencing the SEC’s decision. The SEC has asked for expedited updates on 19b-4 filings, which many market observers interpret as an indication of approval intent.
For context, an ETF can only be launched or sold to the US public when the SEC approves 19b-4 and S-1 forms. Exchanges such as the NYSE and Nasdaq submit 19b-4 forms (also known as Exchange Rule Changes) to the SEC when listing a new product. S-1 forms, also known as ‘Registration Statements’, are filed by potential issuers, such as asset managers like BlackRock and VanEck. These forms detail the structure, management, and operations of the proposed ETF product.
Market Reaction
The change in ETF approval odds has been reflected in the prediction market, Polymarket, where odds jumped from 10% to 59%. This altered sentiment was also visible on ETH price charts, with the altcoin increasing by over 19% and hitting $3.7K, wiping out April’s losses. This bullish sentiment also boosted the entire crypto sector, including Ethereum Classic [ETC], which increased by 17%, from $28 to $32.9.
However, it’s important to note that the SEC’s update only involved the 19b-4s and not the S-1s. Nate Geraci of ETF Store suggested that the SEC’s update could lead to a ‘technical’ approval of 19b-4s but a slower process for S-1s. If the 19b-4s are approved, the final approval of the ETH ETF could still take some time. However, according to some market observers, it’s more a question of ‘when’ rather than ‘if’. The staking feature remains an unresolved issue at this stage.
