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Regulators are suddenly requesting that exchanges seeking to list and sell shares in spot ether (ETH) exchange-traded funds revise important paperwork pertaining to these products.
Three sources familiar with the matter informed CoinDesk that the U.S. Securities and Exchange Commission is requesting rapid updates on 19b-4 filings, indicating they may be moving to accept these applications ahead of a crucial deadline this Thursday.
That does not, however, imply that the ETFs will be allowed. Before the instruments could start trading, prospective issuers also needed their S-1 applications accepted. One source with knowledge of the situation noted that because SEC is not subject to a deadline, it may take an endless period of time to approve the S-1 paperwork.
A person familiar with the subject said that one company in discussions with the SEC believes that it might be on the right track for approval, in contrast to feeling some weeks ago that the SEC was dragging its heels.
After learning of rumors that the SEC would be viewing the applications more favorably, Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart increased their odds for the approval of a spot ETF to 75% from 25% on Monday.
Later on, they clarified that the odds were connected to the 19b-4 approvals. On May 23, the SEC is supposed to decide on VanEck spot ether ETF.
Since the Ethereum blockchain switched from a proof-of-work consensus process to a proof-of-stake mechanism, the SEC has been formally looking into whether ether, the main native asset, is a security.
If the SEC might reject the spot ether ETF filings is if it decides that ether is a security.
One test of the agency’s opinion on ETH’s security status has just surfaced at Prometheum. Monday saw the special purpose broker declare the soft launch of its ether custody service. In due course, the business plans to introduce custody and trading services for other digital assets, particularly those that are regarded as securities rather than commodities in the United States.
Related: SEC Ether ETF: Odds Low, Potential High for Surprise