- Potential SEC approval of Ethereum ETF by May 23 marks a key milestone for the digital asset market
- Grayscale announced detailed information about the Grayscale Ethereum Mini Trust ahead of any potential ETH ETF approval, unlike the Bitcoin equivalent
- The launch of the Grayscale Ethereum Mini Trust alongside ETHE could result in fewer outflows compared to Bitcoin ETF launches due to lower fees and no required action from investors
The SEC may soon approve the first Ethereum ETF, marking a major milestone for the crypto market. Speculation indicates a 75% chance that the Ethereum ETF could get approved by May 23. Unlike with the Bitcoin ETF, Grayscale has provided detailed plans for the Ethereum ETF ahead of any approval. This contrasts with Bitcoin, where GBTC saw huge outflows after the Bitcoin ETF launched without similar preparations in place. The launch of the Grayscale Ethereum Mini Trust alongside the existing ETHE trust could mean fewer outflows for Ethereum due to lower fees and no action required by investors. However, recent amendments removing staking may still lead to considerable outflows.
Ethereum Price Surges on ETF Speculation
The potential for ETF approval has fueled an 18% surge in Ethereum, marking its highest price since 2021. The key deadline is May 23 when the SEC must approve the listing exchange’s filing. Additionally, the ETHE and ETH filings need to become effective before listing. Grayscale has assured ETHE holders no action is required before the planned spin-off distribution.
Ethereum ETF Preparations
Grayscale has filed a Form S-1 for a new Ethereum ETF called Grayscale Ethereum Mini Trust with the proposed ticker ETH. They also filed an Information Statement on Schedule 14C for the existing ETHE Trust, detailing how ETHE would seed the new mini-trust through a spin-off. According to Grayscale, this spin-off distribution would benefit existing ETHE shareholders through lower averaged fees across both products.
Bitcoin ETF Contrast
The Bitcoin ETF saw significant outflows from GBTC due to its much higher fees and lack of advance planning. Without a corresponding mini-trust in place, investors migrated to lower fee options once available. The combination of high fees and required action by investors contributed to $17.6 billion in GBTC outflows.
Removal of Staking Amendment
While the Ethereum ETF preparations may stem outflows compared to Bitcoin, Grayscale recently amended its S-1 filing to remove staking for the Ethereum held by the Trust. This loss of a yield advantage could still lead to considerable ETF outflows as investors seek better yielding options.
