US SEC approves ETH spot ETF review request to stock exchanges, but why?

“The U.S. Securities and Exchange Commission's (SEC) Division of Trading and Markets has contacted stock exchanges that have filed to list Ethereum (ETH) spot ETFs and informed them that it will approve their 19b-4 (formal examination request) filings this week,” cryptocurrency media outlet The Block reported today, citing sources familiar with the matter. This is a 180-degree turnaround from two weeks ago, when the SEC was not interested in ETH spot ETF filings. “This is unprecedented,” the source added, “and has turned the approval of an ETH spot ETF into a political issue.

In response, the issuers responsible for filing the ETF S-1s have reportedly contacted the SEC, but the SEC's Division of Corporation Finance, which is responsible for approving S-1s, has taken a different stance. In order for an ETF to launch in the U.S., both a 19b-4 and S-1 filing must be approved by the SEC, with the 19b-4 being approved by the Division of Trading and Markets and the S-1 being approved by the Division of Corporation Finance.

“Given the lack of consensus within the SEC, it is likely that the SEC's notice of 19b-4 approval for an ETH spot ETF is highly politicized,” said another source. Former US President Donald Trump's recent pro-crypto rhetoric has been met with a response from the Biden administration and the Democratic Party. Meanwhile, the SEC did not respond to The Block's request for comment. Earlier, US financial weekly Barron's reported that “the SEC is leaning toward approving the launch of an ETH spot ETF,” citing sources familiar with the matter.

In response, Scott Johnsson, a U.S. financial lawyer, wrote on his X that “The SEC spent nearly four months reviewing the Bitcoin Spot ETF S-1 and five months reviewing the Bitcoin Futures ETF S-1. Yesterday, reports spread about the potential approval of an Ethereum ETF within the SEC's Division of Corporation Finance. It is likely that this work has only just begun. We don't know how quickly they will move forward with the process, as nothing is simple at this point.”