The U.S. Securities and Exchange Commission (SEC) has given the green light for a spot Ethereum ETF, but the journey is not over yet. Investors must be aware of critical aspects regarding the ETF’s trading initiation and the potential risks involved. This article delves into the forthcoming steps and what investors can expect.
When Will the ETH ETF Start Trading?
Despite the SEC’s approval of 19B-4 applications for eight ETFs, trading won’t commence by May 24 and might not start in the coming weeks. The S-1 Form approvals are still awaited, meaning the ETFs are approved but are not yet ready for exchange trading. This ongoing process could stretch into July or August, as reported by Galaxy Digital.
This delay stems from several factors. For one, final adjustments to the S-1 Forms remain incomplete. Additionally, the SEC might impose further requirements on Ethereum ETFs, given their complexity relative to Bitcoin. Moreover, the ongoing legal scrutiny, including Wells Notices sent to key players in the Ethereum ecosystem like MetaMask and Uniswap, could impact ETF trading by introducing volatility that the SEC aims to avoid.
What to Monitor After Listing?
Post-listing, attention will turn to the fate of the ETHE trust issued by Grayscale, which holds $11 billion in assets. There is concern that high-profit investors could quickly liquidate their holdings, causing substantial outflows. If this $11 billion reserve results in daily outflows of hundreds of millions of dollars without equivalent inflows into other ETFs, market complications could arise.
Key Considerations for Investors
Investors should keep the following points in mind:
- Pending S-1 Form adjustments could delay trading.
- The SEC might impose additional requirements due to Ethereum’s complexity.
- Legal actions against Ethereum-related entities could introduce volatility.
- ETHE trust outflows might affect the broader market if not counterbalanced by other ETF inflows.
These factors are crucial for assessing the potential impact on the Ethereum ETF market and investor strategy.
In conclusion, while the SEC’s approval marks a significant milestone, several hurdles remain before the spot Ethereum ETF can begin trading. Investors should stay informed about regulatory developments and market dynamics to navigate this evolving landscape effectively.