Major asset management firm Franklin Templeton has taken a significant step in the cryptocurrency market by listing its spot Ether exchange-traded fund (ETF) on the Depository Trust and Clearing Corporation (DTCC) website.
Listing on DTCC: A Preliminary Move
Franklin Templeton’s proposed spot Ethereum ETF has appeared on the DTCC new securities list with the ticker EZET. The inclusion of this ETF on the DTCC website represents an initial step in the trading process. However, it's crucial to understand that this listing does not guarantee approval from the US Securities and Exchange Commission (SEC). The SEC's final decision will determine whether the ETF can proceed.
The DTCC website commonly displays securities eligible for trading and settlement, including ETFs that have met specific registration or compliance requirements. While this listing doesn't directly affect the SEC's decision, it does facilitate the adjustment of ETF shares to meet market demand, helping to maintain the ETF's market price close to its net asset value (NAV).
Franklin Templeton's Ethereum ETF Application
In February, Franklin Templeton submitted an application to the SEC for a spot Ethereum ETF, joining other major players in the industry like BlackRock, Grayscale, VanEck, and ARK Invest. The 1.5 trillion dollar asset management firm submitted its Form S-1 to the SEC on Feb. 12 to apply for a spot Ether (ETH) ETF. This application, if approved, would list the ETF as the "Franklin Ethereum ETF" on the Chicago Board Options Exchange.
However, the SEC recently delayed its decision on Franklin Templeton's ETF application, citing a need to review the proposed rule change for the listing and trading of shares on the Cboe BZX Exchange. The SEC now has an additional 45 days, i.e., until June 11, for further evaluation.
Outlook for Ethereum-based Funds
Compared to Bitcoin ETFs, the outlook for Ethereum-based funds isn't as optimistic. Bloomberg ETF analyst Eric Balchunas estimated the likelihood of the SEC approving a spot Ether ETF in May to be around 35%. He suggests that the SEC's less active stance, compared to the Bitcoin ETF application process, indicates a strategic move rather than mere delay. SEC Chair Gary Gensler's ambiguity regarding Ether's classification as a security adds complexity to the decision-making process.
JPMorgan analysts anticipate a prolonged delay in regulatory approval for the spot Ethereum ETF. However, they propose that approval might eventually follow legal action, similar to Grayscale's lawsuit, which prompted the SEC to reconsider spot Bitcoin ETF applications.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
