The U.S. SEC Delivers a Major Announcement! Wall Street's Large Funds Are Moving, Ether "Violently Shakes" and Surges Past 3840, Bitcoin Pulls Back to 70,000

Bitcoin has pulled back to the $70,000 level, while Ether briefly surged past $3,840 before retreating to $3,781. Reports suggest that the U.S. Securities and Exchange Commission (SEC) may approve the 19b-4 filing for an Ether spot ETF as early as this Wednesday. Fidelity has submitted its revised S-1 filing. The brief winter in the crypto market seems to be over, with bullish sentiment returning, driven by positive news from Wall Street.

According to The Block, the SEC's Division of Trading and Markets called exchanges on Monday to inform them of the potential approval of the 19b-4 applications for Ether spot ETFs this week. This aligns with earlier reports from Barron’s that the SEC has expressed a preference for approving these ETFs.

The 19b-4 filings are documents submitted to the SEC by national exchanges like Nasdaq or the New York Stock Exchange (NYSE) to seek approval for listing new products on their trading platforms. In the context of ETFs, the S-1 refers to the initial registration form that details how the fund will be managed and how it will track the underlying asset prices.

A source told the media that the SEC's recent 180-degree shift on Ether spot ETFs is due to political pressure, especially after Republican presidential candidate Trump made a speech supporting cryptocurrencies. Many speculate that following Trump's speech, current President Biden aims to gain the support of younger voters by ensuring the SEC approves the Ether spot ETF.

The source stated, “They haven’t even coordinated internally yet, which is why this is likely a political decision.”

However, ETF Store President Nate Geraci doesn’t believe this is a political move. He stated that most of the “heavy lifting has already been done through the approval processes for Ether futures ETFs and spot Bitcoin ETFs.”

Bloomberg Senior Analyst Eric Balchunas tweeted that he heard the SEC wants the revised 19b-4 filing for Ether spot ETFs returned to them, with approval possibly coming as soon as Wednesday.

According to Bloomberg ETF Analyst James Seyffart, quoted by CoinTelegraph, the approved 19b-4 must be accompanied by a signed S-1 registration statement to launch the Ether spot ETF. Even if the 19b-4s are approved this week, signing the S-1 could take weeks or even months.

Earlier reports indicated that Balchunas raised the approval probability for an Ether spot ETF from 25% to 75%.

It's reported that major Wall Street firm Fidelity has also submitted its revised S-1 registration for an Ether spot ETF to the SEC.

In the revised document, Fidelity removed all references to staking and staking rewards. The asset management company had initially planned to offer investors who purchase the fund the option to stake their funds for additional rewards.

Balchunas believes Fidelity’s amendment indicates that the SEC will not allow staking within an Ether spot ETF if approved. Additionally, Van Buren Capital General Partner Scott Johnsson noted that Fidelity made no changes to the commodity trust structure and disclosures, suggesting that the SEC has abandoned the argument that Ether is a security.

Seyffart noted that soon after, Grayscale submitted its initial 19b-4 filing for its Ether mini-trust to the SEC. As Scott Johnsson pointed out, this application is still listed under the “commodity-based trust shares” rule.

Variant Fund Chief Legal Officer Jake Chervinsky responded that approving an Ether spot ETF would require the SEC to acknowledge that unstaked Ether is not a security.

Grayscale also removed all staking-related language from its 14A form application to convert its Ethereum Trust to an ETF.

The continued rise of Bitcoin and Ether aligns with the resumption of inflows into cryptocurrency investment products. According to CoinShares, the total inflows into cryptocurrency investment products for the week ending May 17 amounted to $932 million.

CoinShares’ “Digital Asset Fund Flows Weekly Report” published on May 13 indicated that institutional investors increased their investment in digital assets, with total inflows into crypto investment products reaching $932 million last week. The largest change was once again attributed to Bitcoin investment funds, which received $942 million in inflows.