WisdomTree Withdraws Ethereum Trust S-1 Filing, Regulatory Approval on Hold

WisdomTree has unexpectedly withdrawn its filing for Ethereum Trust S-1 with the SEC, putting brakes on regulatory approval. The company’s application for an investment product on Ethereum has faced a significant setback as it has decided to withdraw its registration statement, which was filed on May 27, 2021.

The SEC has not yet granted or denied the request, and it appears that the firm is not seeking regulatory approval. WisdomTree submitted a formal request on September 6, 2021, to withdraw its registration statement, effectively ending the approval process. This meant that no refund of the registration fee paid to the SEC would be required as the company is willing to bear the costs of expediting the necessary paperwork.

There has also been increasing scrutiny of applications from digital asset-based funds to the Securities and Exchange Commission (SEC), with some enduring lengthy review periods or outright rejection of those applications.

In a similar development, VanEck’s other asset management firm had applied for an Ether ETF registration with the SEC on May 7, 2021; however its Ethereum Strategy EFT (EFUT) shares are now expected to end trading on September 16, 2022. The VanEck fund is scheduled to be liquidated and returned to investors by September 23, 2021.

The regulatory challenges faced by cryptocurrency-based investment products are well-known. According to the SEC, there are concerns about market instability, lack of liquidity, and inadequate safeguards for investors in the digital asset class. The concerns have caused regulators to be cautious, with many applications being rejected or delayed.

For instance, WisdomTree may now withdraw its Ethereum Trust S-1 filing as a means of regrouping and revising its approach to marketing an Ethereum-based investment product. It is possible that the company will reassess its application at a later time, or explore alternative product lines that are more likely to receive regulatory approval.

The impact of WisdomTree’s decision is significant, and it may have broader implications for the cryptocurrency industry. The SEC’s position on digital asset-based investment products is a topic of anticipation for investors and asset managers who are eager to learn more about the evolving regulatory landscape.

Meanwhile, WisdomTree has announced its withdrawal from the Ethereum Trust S-1 filing, emphasizing the intricate and often uncertain regulatory framework surrounding cryptocurrencies. The industry’s struggle to overcome these obstacles does not negate the significance of obtaining regulatory approval for developing a mature and sustainable cryptocurrency market.

For more insights on the regulatory landscape and its impact on the cryptocurrency industry, read our article on “The Evolving Regulatory Landscape for Cryptocurrency”.