WisdomTree, a prominent U.S. exchange-traded fund (ETF) provider, has retracted its Ethereum Trust filing with the Securities and Exchange Commission (SEC).
The New York-based asset management firm initially submitted its S-1 registration statement on May 27, 2021. However, the SEC has neither approved nor denied the application since its submission.
Request to retain fees for future filings
On September 6, 2024, WisdomTree filed a formal withdrawal request with the SEC, seeking to retract the Ethereum Trust S-1 registration. The company clarified in its submission that no securities have been or will be issued under the registration statement. Additionally, WisdomTree requested that the SEC retain the registration fees paid, intending to apply these funds toward future filings. This request aligns with Rule 457(p) of the Securities Act, which allows for the retention of fees for future use.
Previous ether ETF application
WisdomTree’s move to withdraw its Ethereum Trust filing follows its initial application for an Ether ETF in 2021. On May 27 of that year, the firm submitted its S-1 registration, citing the advancement of the Ether market, which was beginning to mirror the maturity seen in the Bitcoin market. At the time, the SEC was reviewing Bitcoin ETF applications from firms such as Fidelity and SkyBridge while also planning for the listing of ETF shares on the Chicago Board Options Exchange’s BZX Exchange.
Despite WisdomTree’s recent decision, another asset manager, VanEck, has discontinued its futures-based Ether ETF due to a lack of demand. VanEck’s Ethereum Strategy ETF (EFUT) is scheduled to cease trading on September 16, with its assets set to be liquidated and returned to investors around September 23. This decision reflects the challenges faced by futures-based cryptocurrency ETFs in gaining traction as spot ETFs dominate the market.
Wisdomtree faces regulatory scrutiny
In addition to withdrawing its Ethereum Trust filing, WisdomTree faces potential regulatory action from the SEC. The firm recently received a Wells Notice indicating that the SEC might pursue enforcement action over alleged violations related to managing three ESG-themed ETFs. These ETFs were closed in February due to low investor interest. Despite the SEC’s concerns, WisdomTree maintains that it has consistently complied with all applicable regulations and intends to engage in the Wells Notice process fully.
WisdomTree’s CEO emphasized the company’s commitment to regulatory compliance, stating, “WisdomTree has consistently acted in compliance with all applicable laws and regulations and intends to engage fully in the Wells Notice process, including responding to the SEC’s concerns.”
As the situation develops, WisdomTree’s decision to withdraw its Ethereum Trust filing and the potential regulatory challenges it faces will be closely monitored by market participants and industry observers.