Ethereum ETF approval odds jump from 25% to 75% – What changed?
The sudden and unexpected reversal by the US Securities and Exchange Commission (SEC) regarding the endorsement of an Ethereum [ETH] Exchange-Traded Fund (ETF) has led Bloomberg's experts to revise the likelihood of its sanction from a mere 25% to an optimistic 75%.
Bloomberg’s ETF expert, Eric Balchunas, noted that the decision turned into a contentious 'political matter,' potentially sparking the SEC's surprising shift of stance.
‘Update: @JSeyff and I are now revising our predictions for the approval of a spot Ether ETF to 75% (previously at 25%), based on today's buzz that the SEC might be reversing their stance on what's become a politically charged issue, causing a flurry of activity (like us, everyone had anticipated a rejection).’
There's word that the SEC has prompted exchanges to fast-track updates to their 19b-4 submissions, a move that many believe hints at the agency's leaning towards approval.
Clarity on Ethereum ETF approval by the SEC
To those new to the process, it's essential to understand that the launch or sale of an ETF in the US is contingent upon the SEC's approval of both 19b-4 and S-1 documents.
Platforms such as the NYSE and Nasdaq submit these 19b-4 documents, also known as Exchange Rule Changes, to the SEC when they aim to list a new offering on their site.
The S-1 documents, also referred to as ‘Registration Statements,’ are lodged by prospective issuers like asset management giants BlackRock, VanEck, and others. These disclosures detail the fund's structure, management, and the operation of the proposed ETF offering.
The surge in the likelihood of ETF approval from 25% to an enthusiastic 75% was spurred by requests for updates to Exchange Rule Changes (19b-4s).
According to Balchunas, the SEC has requested for revised 19b-4 submissions from trading platforms by the morning of May 21st.
“The SEC is seeking revised 19b-4s by 10 am tomorrow morning (reacting to a host of comments they received today), signaling a probable green light as early as Wednesday.”
The ramifications of Ethereum ETF approval
This unfolding event has been mirrored in the prediction market, Polymarket, with the probability of approval soaring from 10% to 59% at the latest count.
This optimistic trend has also been mirrored in ETH’s market performance. The digital currency soared more than 19%, reaching $3.7K and wiping out April’s downturns. This positive wave has lifted the entire cryptocurrency sector, Ethereum Classic [ETC] included.
ETC experienced a 17% surge, climbing from $28 to $32.9, and shifted to a bullish market stance. With the approaching ETC halving event deadline (31st May) looming, ETH’s recent developments could prime ETC for significant gains.
However, Coinglass data reveals that leveraged ETH short traders bore the brunt of this news, with $79 million in short positions liquidated over the last 12 hours.
It's important to note that this update pertains solely to the 19b-4s and not the S-1s. Nate Geraci of ETF Store suggested that the SEC’s maneuver could mean a ‘technical’ nod for 19b-4s, while S-1 approvals might lag.
“It's feasible for the SEC to sanction 19b-4s and then delay S-1s (especially given the reported disengagement in this area)”
Even if the 19b-4s gain approval, the final thumbs-up for the ETH ETF could still be on the horizon. Yet, according to some observers, it’s a question of ‘when’ rather than ‘if.’ However, the matter of staking features still awaits resolution at this phase.
