Ether ETFs Inch Closer to US Approval, London Launces Crypto ETNs

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Bloomberg May 28 23:55 · 10.3k Views

As the SEC paves the way for Ether ETFs and the London Stock Exchange debuted a batch of ETNs linked to Bitcoin and Ether. Bloomberg's Emily Graffeo and Emily Nicolle have the story.

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Transcript

  • 00:00 Let's talk about Ether and what happened last week with the SEC, because
  • 00:04 it wasn't full approval, What was it?
  • 00:06 That's right.
  • 00:07 So in order for the Ether ETF to actually begin trading on exchanges and investors to be able to purchase them, the regulator has to sign off on two separate filings.
  • 00:18 So the approval of one of the filings that we saw last week known as the 19B4 forms
  • 00:24 necessary but not sufficient.
  • 00:27 We still have to see the regulator sign off
  • 00:29 on a form known as S1.
  • 00:31 This is a prospectus filing
  • 00:33 that the issuer themselves files.
  • 00:35 It has
  • 00:36 all information about the fund
  • 00:37 risk disclosures.
  • 00:39 Unlike the first batch of these papers that we saw approved last week, the S ones don't have a deadline.
  • 00:46 So the SEC doesn't have a certain date that they have to make a statement on these funds.
  • 00:51 So
  • 00:52 we might be waiting for days, weeks or even months for that next step before the funds actually begin to.
  • 00:57 Well, that's my next question on me.
  • 00:58 Graffeo is about that timeline here because if the SEC doesn't necessarily have a deadline,
  • 01:04 what are the folks on the other side who are waiting for this approval?
  • 01:07 What's their timeline so
  • 01:09 and can we look to what happened with Bitcoin a few months ago for any sort of guidance?
  • 01:13 Well, it was different with Bitcoin because with the Bitcoin ETF's, we actually saw the regulator sign off on both of the forms at the same time.
  • 01:20 And that's why the funds started trading right after we had that announcement that, oh, they're approved and then they started trading the next day
  • 01:26 for the S1.
  • 01:28 It's actually now up to the issuers, how quickly can they get their paperwork in and then how quickly can the SEC sign off on it.
  • 01:36 With a lot of these issuers, they actually weren't very prepared for the 19 B fours to be approved
  • 01:42 as they were.
  • 01:43 And so now some issuers are saying, well, I'm not as prepared to get my S1 ready.
  • 01:47 I have to be scrambling.
  • 01:49 Others are saying we knew all along, we suspected that they were going to be approved.
  • 01:53 We were operating like that.
  • 01:54 So we're ready.
  • 01:55 So
  • 01:56 the SEC could technically approve some S ones before others, maybe if those firms are
  • 02:02 ready.
  • 02:03 But that's, I mean, it's all up in there.
  • 02:05 We'll have to see.
  • 02:06 They'll likely just approve everything all at once.
  • 02:08 But again, we really don't know.
  • 02:11 I've spoken to some lawyers trying to nail down like, really how?
  • 02:14 Like, when am I going to have to write my next article on this?
  • 02:17 And they said we really don't know days, weeks or
  • 02:20 months.
  • 02:21 Well, it really was a stunning turn of events.
  • 02:23 I know that last week was such a scramble for reporters, but also for issuers as well.
  • 02:27 So that's the US side.
  • 02:29 Let's talk about what's going on with the London Stock Exchange.
  • 02:31 Emily, Nicole.
  • 02:32 So we're talking about the first day of trading for physically back Bitcoin and ether exchange traded notes.
  • 02:38 These are only for professional investors.
  • 02:40 Talk us through how this is different from what we're seeing stateside.
  • 02:46 So in the US, it was a pretty big deal when Bitcoin ECS got approved back in January.
  • 02:51 It was kind of a heraldic moment, a really big moment for the industry.
  • 02:54 But in Europe, we've had crypto Etps for,
  • 02:57 you know, going on five years even more.
  • 02:59 So it's really been a really long time that this has been coming to London.
  • 03:03 Issue is over here have been lobbying to get this done in the UK for quite some time.
  • 03:08 And it almost came as a bit of surprise in in March when the regulator finally said, OK, maybe you can do this, just the professionals.
  • 03:14 So it's been a long time coming.
  • 03:16 But the issue is themselves, you know, they only had a few weeks to get ready as well.
  • 03:18 So it's been scrambling on both sides of the pond.
  • 03:20 What do we expect in terms of flows, Emily Nicole
  • 03:24 Well, because it's professional investors only, we're really not expecting a whole lot.
  • 03:28 You know, some of the issues I've spoken to have said we don't expect to see any of our clients move their holdings over from Europe to London because, you know, they're professionals.
  • 03:36 This is what they do.
  • 03:36 They're used to it.
  • 03:37 They don't need to have things in London or Europe or wherever.
  • 03:40 And so because of that, we're really not expecting see a whole lot of flows going into these products.
  • 03:45 But you know, it's, it's a stepping stone, right?
  • 03:46 And if these things go without a hitch and they get to see some sort of flow, some sort of demand, perhaps that'll give the issue as a case to make to the regulator say you should be opening these up to retail investors too.