SEC Issues Omnibus Order Approving Spot Ether Exchange Traded Funds (ETFs) | Practical Law

SEC Issues Omnibus Order Approving Spot Ether Exchange Traded Funds (ETFs) | Practical Law

The SEC has issued an omnibus order granting accelerated approval of eight US-listed spot Ether (ETH) exchange traded funds (ETFs).

SEC Issues Omnibus Order Approving Spot Ether Exchange Traded Funds (ETFs)

Practical Law Legal Update w-043-4505 (Approx. 4 pages)

SEC Issues Omnibus Order Approving Spot Ether Exchange Traded Funds (ETFs)

by Practical Law Finance
Published on 29 May 2024USA (National/Federal)
The SEC has issued an omnibus order granting accelerated approval of eight US-listed spot Ether (ETH) exchange traded funds (ETFs).
On May 23, 2024, the SEC issued an omnibus order (Spot ETH order) granting accelerated approval of eight US-listed spot Ether (ETH) exchange-traded fund (ETF) applications under Section 19(b)(1) of the Securities Exchange Act of 1934, as amended (Exchange Act). These spot ETH ETF products offer institutional and retail investors exposure to ETH without holding the cryptocurrency directly, providing enhanced investor protections. The Spot ETH order comes four months after the order omnibus SEC order approving eleven spot bitcoin ETFs (See Legal Update, SEC Approves Eleven Spot Bitcoin Exchange Traded Funds (ETFs).
The NYSE Arca, Inc. (NYSE Arca), Nasdaq Stock Market LLC (Nasdaq), and Cboe BZX Exchange, Inc. (BZX) each filed rule change proposals with the SEC to list and trade shares of ETH-based commodity-based trust shares and trust units, as modified by respective amendments filed prior to the SEC approval. Once these filings are approved by SEC staff, the spot ETH ETFs could launch shortly thereafter.
The following eight ETFs are subject to the Spot ETH order:
  • Grayscale Ethereum Trust (under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)).
  • Bitwise Ethereum ETF (under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares)).
  • iShares Ethereum Trust (under Nasdaq Rule 5711(d) (Commodity-Based Trust Shares)).
  • VanEck Ethereum Trust (under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)).
  • ARK 21Shares Ethereum ETF (under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)).
  • Invesco Galaxy Ethereum ETF (under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)).
  • Fidelity Ethereum Fund, (under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)).
  • Franklin Ethereum ETF (under BZX Rule 14.11(e)(4) (Commodity-Based Trust Shares)).
The SEC order notes that these ETF exchange applications did not raise any novel regulatory issues and that the exchanges assisted the SEC in evaluating the proposals and in determining that they are consistent with the Exchange Act and its rules and regulations applicable to a national securities exchange. As a result, the SEC found good cause, under Section 19(b)(2) of the Exchange Act, to approve the proposed rule changes for the eight ETH ETFs on an accelerated basis.
According to the SEC ETH approval order, each exchange has a comprehensive surveillance-sharing agreement with the Chicago Mercantile Exchange (CME) via their common membership in the Intermarket Surveillance Group.
For further detail on these and other crypto ETFs, see Crypto ETF Tracker.