In a landmark decision, the U.S. Securities and Exchange Commission (SEC) has approved the launch of a spot Ethereum exchange-traded fund (ETF), paving the way for institutional investors to gain direct exposure to the world’s second-largest cryptocurrency.
The move comes just five months after the agency gave approval to launch a Bitcoin ETF, marking a seismic shift in the cryptocurrency regulatory landscape in the United States.
TLDR
- The U.S. Securities and Exchange Commission (SEC) has approved the launch of a spot Ethereum ETF.
- This approval comes just five months after the SEC gave the green light for Bitcoin ETFs to be discovered.
- Spot Ethereum ETF likely won’t begin trading until July or August
- VanEck, Fidelity, Franklin, Grayscale, Bitwise, ARK Invest & 21Shares, Invesco & Galaxy, and BlackRock’s iShares Ethereum Trust have submitted Ethereum ETF applications.
- The approval of the Ethereum ETF and passage of the FIT21 cryptocurrency bill signal a shift in the Biden administration’s stance on cryptocurrencies, following former President Trump’s pledge to support the industry.
The SEC’s approval of the Ethereum ETF is expected to result in significant inflows of institutional capital into the Ethereum market.
Geoff Kendrick, head of digital assets research at Standard Chartered, predicts that ETFs will see inflows of $15 billion to $45 billion in the first 12 months after their launch.
This increased institutional participation could potentially push the price of Ethereum higher and further solidify its position as a leading digital asset.
@EricBalchunas You can’t see it on the front website yet, but in my experience Phoenix is always right. https://t.co/xI37RVXqRo
— James Seyff (@JSeyff) May 23, 2024
However, despite SEC approval, a spot Ethereum ETF likely won’t begin trading until July or August, according to a report from Galaxy Digital.
This delay is due to the need for additional regulatory approval and the fund’s greater risk profile compared to spot Bitcoin ETFs.
The process of approving funds and listing them on a trading platform may take longer due to the variety of decentralized applications (dapps) built on top of the Ethereum network, which may require additional disclosures.
Several prominent issuers have submitted applications for an Ethereum ETF, including VanEck, Fidelity, Franklin, Grayscale, Bitwise, ARK Invest & 21Shares, Invesco & Galaxy, and BlackRock’s iShares Ethereum Trust.
The ETF is proposed for listing on Nasdaq, NYSE Arca, and Cboe BZX Exchange.
To address the SEC’s concerns, the potential issuer updated its filings to confirm that it would not be staking ETH for yield, a practice that has drawn scrutiny from the regulator.
The approval of the Ethereum ETF comes amid a broader shift in the regulatory environment for cryptocurrencies in the United States. Earlier this week, the House of Representatives passed the FIT21 cryptocurrency bill, which aims to establish a comprehensive regulatory framework for digital assets.
The passage of the bill, along with the SEC’s approval of the Ethereum ETF, signals a shift in the Biden administration’s stance on cryptocurrencies, following former President Trump’s pledge to support the cryptocurrency industry.
The cryptocurrency community has been monitoring developments surrounding the Ethereum ETF in recent weeks, with speculation that approval is strengthening.
Bloomberg analysts Eric Balchunas and James Seyffart further boosted market expectations by raising the odds of a spot Ethereum ETF being approved this month from 25% to 75%.
The approval of the spot Ethereum ETF marks another major milestone in the continued development of the cryptocurrency industry. After relentless attacks from regulators, including Operation Chokepoint 2.0 and personal anti-crypto campaigns from Gary Gensler and Elizabeth Warren, it seems like things are finally turning in our favor.
2024 will be one of the biggest years in cryptocurrency history.
let’s go!