The SEC has issued final instructions for asset managers launching Ether ETFs, and directed them to submit their final S-1 filings by July 16. The SEC has also given preliminary approval to at least three asset managers, and analysts now expect the ETFs to start trading on July 23. Meanwhile, Coinbase has shifted its strategy in its ongoing lawsuit with the SEC, and is now focusing on getting SEC Chair Gary Gensler's communications during his tenure. Additionally, Donals Trump’s VP pick, JD Vance, criticized Gensler's approach to crypto regulation in a resurfaced video that is circulating on social media again.
SEC Issues Final Instructions for Ether ETFs
The United States Securities and Exchange Commission (SEC) has issued final instructions to asset managers preparing to launch Ether exchange-traded funds (ETFs). Bloomberg analyst Eric Balchunas stated that the Commission directed issuers to submit their final S-1 filings by July 16. These final filings must include the fees that issuers plan to charge for their new crypto funds.
On May 23, the SEC approved issuers' 19-b form, proposing rule changes to allow crypto-based investment vehicles. Now, asset managers need approval for their initial securities registration S-1 forms. In response to regulatory concerns, issuers like ARK Investments and Fidelity recently removed staking from their Ether ETF plans.
The Ether ETFs will have various fee structures, with Invesco and Galaxy setting management fees at 0.25%. This is slightly higher than VanEck and Franklin Templeton, which will have fees of 0.20% and 0.19%, respectively.
These fees are much lower than the 2.50% management fees charged by Grayscale’s Ethereum Trust. While Grayscale plans to launch a new spot Ether ETF, it has not yet revealed the new fees.
Three Ether ETF Issuers Receive Preliminary SEC Approval
The SEC has reportedly given preliminary approval to at least three asset managers for their spot Ether ETFs. People are now speculating that these ETFs could begin trading as early as next Tuesday.
The approved applicants include BlackRock, Franklin Templeton, and VanEck. Additionally, other firms like Fidelity, ARK 21Shares, Grayscale, Bitwise, and Invesco Galaxy are also vying to launch their Ether products next week. One source mentioned that all eight spot Ether ETFs are expected to launch simultaneously, which was the SEC’s approach with spot Bitcoin ETFs as well.
Analyst Eric Balchunas expects the SEC to officially approve the S-1s next Monday after trading hours, which would allow the spot Ether ETFs to begin trading on Tuesday, July 23.
Gary Gensler’s commission provided initial feedback on the S-1 filings in late June, about five weeks after the SEC approved the 19b-4 filings on May 23. This aligns with recent statements from Bitwise’s chief compliance officer, Katherine Dowling, who mentioned seeing fewer issues being vetted back and forth between issuers and the SEC, which indicates that the launch is very close. .
Bitwise’s chief investment officer, Matt Hougan, speculated that spot Ether ETFs could attract up to $15 billion in inflows in the first 18 months of trading, similar to the inflows seen by spot Bitcoin ETFs since their launch six months ago. If approved, the spot Ether ETFs would be listed on the Nasdaq, New York Stock Exchange, and the Chicago Board Options Exchange.
At press time, ETH is trading hands at $3,473.23 after its price rose by over 4% in the past day of trading. The altcoin’s price is also 13% in the green on its weekly time frame.
Coinbase Shifts Strategy in SEC Lawsuit
The SEC not only has its hands full with the Ether ETFs. Crypto exchange Coinbase also shifted tactics in its effort to subpoena SEC Chair Gary Gensler. The exchange now wants his private communications only during his tenure as Chair.
Initially, Coinbase’s lawyers argued that access to Gensler’s private chats before and during his time as SEC Chair was necessary for their defense in the SEC’s lawsuit against them. However, a July 15 filing indicates that Coinbase will now only focus on Gensler’s communications from his time as SEC Chair after Judge Katherine Polk Failla was a bit reluctant to accept their broader request.
Gensler has been SEC Chair since April of 2021, but Coinbase initially wanted access to his communications dating back to 2017, before he began teaching a "Blockchain and Money" course at MIT in 2018. Coinbase believes these private chats are crucial to understanding how Gensler’s views on crypto regulation have evolved. Judge Failla, however, was more concerned about the burden of looking into Gensler’s statements before he became Chair.
Coinbase’s opening brief for its motion to compel is due on July 23, with the SEC's response due by Aug. 5.
The SEC sued Coinbase in June 2023, and accused the exchange of violating federal securities laws by listing 13 tokens it considers to be securities and operating as an “unregistered securities broker” since 2019, almost two years before Coinbase's initial public offering in April of 2021. Coinbase argues that the tokens listed on its exchange should not be considered securities and thus fall outside of SEC regulations.
JD Vance Slams Gensler
James David Vance, Donald Trump’s choice for vice president, has been very vocal about his criticism of Gary Gensler. Vance even called him the "worst person" to regulate the crypto industry in a recently resurfaced video.
The clip has been circulating on social media, and features Vance speaking at Remedy Fest, a private conference hosted by Y Combinator and Bloomberg on Feb. 28. Vance specifically talked about his strong disagreement with Gensler's approach, and stated that Gensler "wants to inject politics way too much into the actual business of securities in the US." Vance also called Gensler’s stance on blockchain and crypto fundamentally flawed.
Vance's dislike of Gensler is not new. In fact, he has consistently shown support for the crypto industry throughout his political career. On May 16, Vance was among the 60 senators who voted to overturn the SEC's controversial SAB 121 accounting guidelines, which restrict US banks from custodying crypto assets.
Earlier in the year, on Feb. 7, Vance led a group of Republican senators in writing a letter to Gensler, raising concerns about an enforcement action against the crypto mining firm Debt Box. In this case, a judge found that SEC lawyers used false statements to justify freezing the company's assets.
Vance is a very strong believer in the fact that crypto is a solution to government overreach. In February of 2022, he praised crypto in response to Canada’s finance minister freezing the bank accounts of truckers protesting COVID-19 lockdowns, arguing that crypto protects people against actions like this by government authorities.
Vance's background includes service in the US Marines, studying law at Yale, and working as a venture capitalist under PayPal co-founder Peter Thiel. In a 2022 financial disclosure report for the US Senate, Vance reported holding between $100,001 and $250,000 in Bitcoin (BTC).
