Franklin Templeton’s Ethereum ETF Listed on DTCC Despite Expected SEC Rejection

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While rumors have it that the SEC is most likely to reject Ethereum ETFs on the May 23rd deadline, Franklin Templeton’s recent listing of its Ethereum ETFs on the Depository Trust and Clearing Corporation (DTCC) has shocked everyone. 

The “Franklin Ethereum TR Ethereum ETF,” with the code EZET, was added to DTCC after news suggested that the U.S. Securities and Exchange Commission (SEC) might deny its approval for Ethereum-based ETFs.

[PN] FRANKLIN ETHEREUM TR ETHEREUM ETF (EZET) ADDED TO DTCC WEBSITE pic.twitter.com/yj0e10Q1pF

— Phoenix » PhoenixNews.io (@PhoenixTrades_) April 26, 2024

Franklin Templeton’s Ethereum ETF

Franklin Templeton has launched its Ethereum ETF, which is currently listed on the DTCC. The DTCC website’s Create/Redeem column indicates that the ETF is eligible for creation and redemption, two critical aspects for maintaining an ETF’s market price in line with its net asset value. 

However, this listing does not guarantee the SEC’s approval for the spot Ethereum ETF, which will be decided next month. 

Franklin Templeton’s Ethereum ETF listing on DTCC aligns the company with other industry leaders, such as BlackRock, Grayscale, VanEck, and ARK Invest, which all compete in the Ethereum ETF market. 

The firm submitted an S-1 filing to the SEC in February, seeking approval for its spot Ethereum ETF, which would list on the Chicago Board Options Exchange if approved.

Challenges in the Ethereum ETF Landscape

SEC’s Gary Gensler had previously hinted in a CNBC interview that just because the SEC had approved Bitcoin ETFs, there’s no guarantee that the regulators will approve ETH ETFs in the future. 

The agency’s hesitance may also stem from SEC Chair Gary Gensler’s reluctance to clarify whether Ether is a security. 

Franklin Templeton’s Ethereum spot ETF being listed on DTCC does not indicate that it will ultimately be approved by the SEC. 

Some analysts suggest rejection could lead to a lawsuit, similar to the legal challenge that prompted the SEC to reconsider Grayscale’s application for a spot Bitcoin ETF.

Uncertainty Around Ethereum ETFs

The listing on the DTCC website occurs amid widespread speculation that the SEC may not approve Ethereum ETFs within the next month. 

According to sources, the SEC’s discouraging meetings with major players in the crypto industry indicate a likely denial of their applications for listing Ethereum-based ETFs. 

One source said that recent meetings between issuers and the SEC were one-sided, with the SEC displaying limited engagement. This contrasts with the detailed discussions leading up to the approval of spot Bitcoin ETFs in January 2024.

The SEC’s anticipated denial could slow the advancement of Ethereum-based ETFs and dampen industry enthusiasm. Bloomberg ETF analyst Eric Balchunas estimated only a 25% chance of approval for spot Ethereum ETFs, highlighting the agency’s lack of engagement compared to its approach to Bitcoin ETFs.