(Bloomberg) -- The US Securities and Exchange Commission has given indications to at least four issuers of spot-Ether exchange-traded funds to file paperwork for potential approval, according to people familiar with the matter. Three of the issuers said the agency signaled trading may begin on July 23.
The greenlight could follow their submissions of what are known as S-1 registration statements, which the issuers could start to file this week, said the people, who asked not to be identified discussing the private matter.
In May, the SEC signed off on a proposal by exchanges to list the products, another landmark for the crypto industry. A separate approval is needed before they can be launched. A representative for the SEC did not immediately respond to a request for comment
These funds, which would hold Ether — the second-largest cryptocurrency after Bitcoin — directly, could see inflows of between $4.7 billion to $5.4 billion in the six months after they debut, according to a recent report from Citigroup. Still, researchers at the bank also say that the flows could skew lower because Bitcoin ETFs launched earlier this year and any investors looking to get crypto exposure may have already done so when those funds entered the market.
The majority of the asset managers in the Ether-funds race also launched spot-Bitcoin ETFs in January, which thus far have raked in nearly $16 billion in total net inflows.
Asset managers have been making concessions to win SEC approval, notably on so-called staking, or the process of earning rewards for blockchain maintenance. Fidelity said it will keep the Ether it buys as part of the ETF out of staking.
Staking is a key issue for Ether because it raises questions about whether the token should be treated as a security. Last year, the SEC in a lawsuit accused Coinbase of breaking its rules by offering staking services.
Ether rose less than 1% to $3,450 as of 12:45 p.m. in New York. It has gained around 50% this year, comparable to the increase registered by Bitcoin.
Bitcoin rallied after the US ETFs debuted in January, rising to a record high of almost $74,000 before parings the gains. It was at about $64,500 on Thursday.
Ether could face a similar reception, according to a report from crypto research firm K33. The price will fall in the immediate aftermath of the ETF debut as a “sell-the-news event,” K33 said, but could still recover and outperform Bitcoin in the coming months. The researcher noted that investors have “moderate expectations” and will be less excited to buy into ETFs holding Ether in comparison to those holding Bitcoin.
--With assistance from Vildana Hajric.
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