VanEck files Ethereum ETF S-1 with SEC

Asset management company VanEck officially submitted an S-1 registration application form to the U.S. Securities and Exchange Commission (SEC) to establish an Ethereum spot exchange-traded fund (ETF). The move represents a key step towards the launch of the first Ethereum spot ETF in the United States. According to the preliminary prospectus, the proposed VanEck Ethereum ETF will trade on the Cboe BZX exchange under the symbol "ETHV."

The fund aims to reflect the price performance of Ethereum, net of related fees. Bloomberg ETF analyst Erich Balchunas said that VanEck’s move should trigger other issuers to actively initiate applications. Only Bitwise has submitted an S-1 application a week ago.

Source: X Bloomberg ETF analyst Erich Balchunas said VanEck would immediately trigger other issuers to apply.

This ETF will hold actual Ethereum, denominated daily based on the MarketVector Ethereum benchmark rate. The index is calculated using prices on what VanEck considers to be the top five Ethereum exchanges. It is worth noting that the application states that the trust fund and related parties will not engage in Ethereum staking or other revenue-generating activities. The ETF will initially only allow cash creation and redemption by authorized participants.

VanEck’s filing comes as the crypto industry awaits SEC approval of the first Ethereum spot ETF, which could be a more direct reflection of Ethereum’s price movements than existing futures products.

ETFStore President: Ethereum ETF will start trading on July 15

ETFStore President Nate Geraci predicts that an Ethereum spot ETF could begin trading within the next two weeks, possibly as early as July 15. Geraci said the U.S. Securities and Exchange Commission (SEC) may complete the approval process for Ethereum spot ETF trading this week.

Source: X ETFStore President Nate Geraci predicts that the Ethereum ETF may start trading on July 15

Recently, the SEC returned S-1 filings with minimal comment to potential issuers including BlackRock, Fidelity and Grayscale. Geraci outlined a potential timeline, suggesting issuers would file a revised Form S-1 on July 8 and potentially receive final approval around July 12. This accelerated timetable reflects constructive dialogue between regulators and ETF issuers.

The growth momentum of the Ethereum ETF has prompted more market activity. Prominent ETF issuer YieldMax has also filed for an Ethereum options income strategy ETF, while Hashdex is seeking approval for an ETF combining Bitcoin and Ethereum. The SEC’s decision in the coming days is expected to have a significant impact on crypto investing. Approval of an Ethereum spot ETF could lead to wider mainstream adoption of Ethereum-based financial products.

Grayscale expects to launch “Ethereum Mini Trust” on July 18

Additionally, cryptocurrency asset manager Grayscale Investments has set July 18, 2024 as the record date for the first creation and distribution of shares in the new Grayscale Ethereum Mini Trust (ETH Trust), which will be allocated to existing Some Grayscale Ethereum Trust (ETHE) shareholders. According to the press release, shareholders holding ETHE shares will receive new ETH Trust shares at a 1:1 ratio. Grayscale plans to transfer 10% of its Ethereum holdings into the new trust.

Image source: Grayscale New Grayscale Ethereum Mini Trust (ETH Trust) issuance information

Grayscale also plans to list ETH Trust on the New York Stock Exchange Arca under the code "ETH", which may improve liquidity and increase accessibility to Ethereum investors, opening the market to a wider range of participants.

In addition, Grayscale provided several conditions that must be met prior to the distribution, including the effectiveness of the ETH Trust's Form 8-A Registration Statement and Form S-1 Registration Statement and New York Stock Exchange Arca's approval of the listing of ETH Shares. The company stressed that although they have established a timetable, there is no guarantee that the distribution will proceed as scheduled.

What is the impact on existing ETHE shareholders?

The creation of the ETH Trust is a significant development for existing ETHE shareholders. Starting from July 18, 2024, ETHE shares will no longer have the right to receive ETH Shares, symbolizing the "ex-dividend date". Following the initial distribution, existing ETHE shareholders will not need to pay any fees, exchange or surrender existing shares, or take other actions to receive new ETH Trust shares. Shareholders will automatically see ETHE Shares and ETH Shares in their investment accounts.

Grayscale’s announcement indicates that the initial distribution is expected to be tax-free for U.S. federal income tax purposes. However, neither the transfer of Ethereum to the ETH Trust nor the distribution of ETH Shares is expected to result in taxable income, gain, loss, deduction, credit or gain to ETHE shareholders.

Market expectations for Ethereum spot ETF

With VanEck and other major financial institutions such as Grayscale filing S-1 applications, market expectations for the Ethereum spot ETF have reached new heights. Ethereum plays a key role in the digital asset industry, and investor demand for more Ethereum-based financial products continues to increase. The launch of these ETFs can not only provide more direct market exposure, but also increase the diversity of investors' choices.

Following VanEck’s lead, other publishers such as Bitwise followed suit and submitted similar applications. This reflects industry consensus on the potential of an Ethereum spot ETF, although regulatory challenges remain. As the SEC scrutinizes these filings, financial markets are watching the impact these ETFs could have on the overall market. If approved, these ETFs would be a major milestone for cryptocurrency investing, further promoting mainstream adoption of Ethereum and other digital assets.

[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.