(SEC) has started accepting comments on the applications submitted by Grayscale, Fidelity, and Bitwise to introduce spot Ethereum exchange-traded funds (ETFs).

The requests pertain to rule changes proposed by Cboe BZX and NYSE Arca, with the intention to list and trade shares of the three ETFs. Feedback can be submitted within 21 days of being published in the federal register.

This phase is a standard part of the ETF approval process, similar to the procedure followed for spot Bitcoin ETF applications, which sought input from American citizens and organizations in the past.

Market Associations

Each notice explores topics that are anticipated to shape the SEC's decision on whether to approve or deny the proposed spot Ethereum ETFs.

Specifically, the notices examine the correlation between the Ethereum futures and spot markets, and evaluate the significance of the spot ETH market in relation to the futures market. This correlation is crucial as the SEC has previously accepted Ethereum futures ETFs.

Based on an analysis by Coinbase, NYSE Arca and Grayscale have claimed that the correlation proves that fraud and manipulation are not likely in the spot Ethereum market. They have also argued that the Investment Company Act of 1940 does not offer relevant protections to warrant the rejection of certain spot crypto ETFs, contrary to the SEC's stance.

Cboe and Fidelity have maintained that their proposal and research demonstrate the importance of the spot Ethereum market. Meanwhile, NYSE Arca and Bitwise have presented their own analysis to support this claim.

The notices also request comments on other issues including fund custody, creation and redemption mechanisms, and sponsor fees. The call for opinions is a standard procedure and does not signify the likelihood of a fund being approved.

Ethereum Investments

The call for comments follows a series of delayed decisions by the SEC regarding spot Ethereum ETFs. The involvement of prominent fund managers like Grayscale, Fidelity, and Bitwise underscores the increasing interest in cryptocurrency-based financial products among traditional investment firms.

The goal of the three fund managers is to introduce a spot Ethereum ETF, allowing investors to acquire shares that mirror the price of Ethereum. With the SEC's approval of 11 Bitcoin ETFs in January leading to significant activity and popularity, there is a strong push for similar regulatory approvals for Ethereum-focused products.

Recently, Coinbase engaged in discussions with the SEC regarding Grayscale's proposal for an Ethereum ETF. Grayscale intends to convert its existing Ethereum Trust into a spot Ethereum ETF, a move that was endorsed by Coinbase in a presentation to the regulator.

The pursuit of Ethereum ETFs is occurring amidst conflicting sentiments in the market. While the approval of spot Bitcoin ETFs by the SEC marked a major milestone, analysts hold different views on the potential for Ethereum ETFs.

Some predict that the SEC may postpone its approval to create a distinction between Bitcoin and Ethereum products. Despite this, entities like Standard Chartered anticipate SEC approval by May and have expressed optimism regarding the matter.