Whether Ethereum spot ETFs can obtain approval from the U.S. Securities and Exchange Commission (SEC) and whether pledging is possible may become crucial. Grayscale and Fidelity both canceled their plans to pledge ETH in ETFs in their new applications submitted to the SEC this Tuesday.
(Morning brief:
Important sign: VanEck and Franklin Ethereum spot ETFs have been listed on the DTCC pre-listing! ETH surges to $3,800)
(Background:
Don’t get too excited! Bloomberg analyst: SEC may approve Ethereum spot ETF “19b-4” as early as Wednesday, but there is still one crucial hurdle to overcome..)
Market expectations for the approval of Ethereum spot ETFs by the U.S. Securities and Exchange Commission (SEC) surged sharply this week. This includes Bloomberg ETF analysts raising the approval probability to 75%, VanEck and Franklin’s Ethereum spot ETFs being listed by the Depository Trust & Clearing Corporation (DTCC), and six Ethereum spot ETF applicants submitting revised 19b-4 documents, including VanEck, Fidelity, Franklin, Ark Invest, Grayscale, and Invesco Galaxy. These positive news continuously push Ethereum to continue its upward trend.
Grayscale and Fidelity cancel ETH pledging plans
It is worth mentioning that Grayscale, in its application last October to convert Grayscale Ethereum Trust (ETHE) into Ethereum spot ETF, proposed to investors that they could pledge Ethereum through ETHE. However, in the revised preliminary prospectus submitted this Tuesday, Grayscale has deleted the relevant wording, indicating that Grayscale seems to have abandoned the plan of pledging Ethereum through ETHE. Other applicants have taken similar measures.
Previously, 21Shares/Amun canceled the plan to pledge Ethereum in its updated application document on the 10th, and Fidelity’s revised S-1 application document submitted to the SEC this Tuesday also showed that Fidelity has withdrawn its proposed plan to pledge Ethereum holdings through the ETF. In Fidelity’s previous application document, it stated that it intended to pledge a portion of the trust fund’s assets to one or more infrastructure providers, but Fidelity clearly stated in the revised S-1 application document that it will not pledge the Ethereum held in custody by the custodian.
Regarding the submission of revised 19b-4 documents by several Ethereum spot ETF applicants and the abandonment of Ethereum pledging, Bloomberg ETF analyst James Seyffart stated:
The key to approval lies in pledging.
Previously, Galaxy Digital research director Alex Thorn stated that in order for the SEC to approve Ethereum spot ETFs, it may consider that ETH itself is not a security, but pledging ETH would make it a security, and the SEC would prohibit these ETFs from pledging the ETH they hold.
Mark Connors, research director at digital asset investment company 3iQ, stated:
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