The U.S. Securities and Exchange Commission (SEC) asked aspiring ether exchange-traded fund exchanges to update 19b-4 filings ahead of a key deadline this week.
The SEC had previously been expected to reject the ether ETF filings, and while there's no guarantee of approval, the move suggests progress is being made.

The exchanges that want to list and trade shares of spot ether (ETH) exchange-traded funds are abruptly being asked by regulators to update key filings related to these products.

Exchanges are being asked to update 19b-4 filings on an accelerated basis by the U.S. Securities and Exchange Commission, three people familiar with the situation told CoinDesk, suggesting they may be moving to approve these applications ahead of a key deadline this Thursday.

That doesn't mean the ETFs will be authorized, though. Would-be issuers also need their S-1 applications approved before the products could begin trading. SEC could take an indefinite amount of time to approve the S-1 documents, one person familiar with the matter said, as it isn't tied to a deadline.

One company in talks with the SEC said it feels like it might be on the right track for approval, in a turnaround from feeling some weeks ago that the SEC was dragging its feet, according to a person familiar with the matter.

Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart raised their odds for the approval of a spot ether ETF to 75% from 25% on Monday after hearing chatter that the SEC could be taking a more favorable stance towards the applications.

They later corrected their statement, saying that the odds were related to the 19b-4 approvals. The SEC is expected to make a decision on VanEck spot ether ETF on May 23rd.

The SEC has been investigating whether ether, the chief native asset to the Ethereum blockchain, is a security, launching a formal inquiry after the network moved from a proof-of-work consensus mechanism to a proof-of-stake mechanism.

If ether is deemed to be a security by the SEC, that may be one reason for the regulator to reject the spot ether ETF applications.

One test of the agency's view on whether ETH is a security has newly emerged at Prometheum. The special purpose broker announced Monday it had soft-launched its ether custody service. The company eventually intends to launch custody and trading services for other digital assets – importantly, assets that are treated as securities in the U.S., not commodities.

UPDATE (May 20, 2024, 21:10 UTC): Adds additional information and context.

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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation, covering regulators, lawmakers and institutions. When he's not reporting on digital assets and policy, he can be found admiring Amtrak or building LEGO trains. He owns < $50 in BTC and < $20 in ETH. He was named the Association of Cryptocurrency Journalists and Researchers' Journalist of the Year in 2020.

Helene Braun

Helene is a New York-based news reporter at CoinDesk, covering news about Wall Street, the rise of the spot bitcoin exchange-traded funds (ETFs) and updates on crypto exchanges. She is also the co-host of CoinDesk's Markets Daily show on Spotify and Youtube. Helene is a recent graduate of New York University's business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.

Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.