The US Securities and Exchange Commission could approve exchange-traded funds (ETFs) linked to the spot price of ether as early as 4 July, as discussions between asset managers and regulators enter their final phase, industry executives and others told Reuters.
Eight asset managers, including BlackRock, VanEck, Franklin Templeton and Grayscale Investments, are seeking SEC approval for the funds. Most of them had launched bitcoin cash ETFs in January, marking the end of a decade-long battle with regulators. Grayscale is again hoping to convert an existing fund into an ETF.
Executives from both companies, who requested anonymity due to the confidential nature of the discussions, said the process of amending the offering documents was almost complete, leaving only "small" issues to be resolved. These documents must be approved before the ETFs can be launched.
A lawyer working with one of the issuers, who also requested anonymity, said that negotiations were "close to being concluded" and that approval could come "probably in a week or two".
The SEC declined to comment. In an interview with Reuters earlier this month, SEC chairman Gary Gensler said the launch date depended in part on how quickly issuers responded to the regulator's questions.
The January launch of funds tracking the spot price of bitcoin was one of the most successful in the ETF market, attracting around $8 billion in assets, according to Morningstar Direct data. At the end of June, these nine new products held nearly $38 billion in assets, although the holdings of the Grayscale Bitcoin Trust - which converted its $27 billion bitcoin fund into an ETF at the same time - fell to $17.8 billion.
Many ETF and crypto-currency analysts believe the launch of new cash-based ether ETFs will be less impressive.
"Ethereum doesn't have the same size in terms of market capitalisation, nor the same volumes," said James Butterfill, head of research at Coinshares.
The price of ether has stagnated this month, falling by more than 11%, while bitcoin has fallen by 9.8%. Movements in bitcoin often influence the price of ether.
Given the differences in market size and nature between the two crypto-currencies, inflows could be much more muted when ether ETFs launch, said Bryan Armour, ETF analyst at Morningstar.
"For bitcoin, there had been pent-up demand for a decade and investor interest was huge," he said. "This is simply not going to generate the same enthusiasm."
The SEC has already approved the rule changes necessary for the New York Stock Exchange, Nasdaq and Cboe to register and oversee trading of the new products. This means that as soon as SEC staff approve filings, products could begin trading in as little as 24 hours.
