ETF Approval
On May 23, 2024, the US Securities and Exchange Commission (SEC) approved the sale of spot Ether Exchange-Traded Funds (ETFs) in the United States. This decision follows the approval of Bitcoin ETFs earlier this year, marking the SEC’s second major move regarding crypto Exchange-Traded Products. However, trading will not commence immediately as issuers need individual ETF registration statements approved by the SEC, detailing investor disclosures. The timeline for this approval process remains uncertain, but some insiders suggest a late summer launch is likely.
Industry Reactions and Market Impact
Several companies that sponsor Bitcoin ETFs, including BlackRock and Bitwise, are preparing to launch Ether funds. Despite the SEC’s approval, the price of Ether rose only 2% initially, following a 20% surge earlier in the week when the approval rumors first came to light. The SEC’s order approves applications for eight different Ether funds including VanEck, Fidelity, Franklin, Grayscale, Bitwise, ARK Invest 21Shares, Invesco Galaxy, and BlackRock – for listing on the Nasdaq, NYSE Arca, and Cboe BZX exchanges.
Future Prospects for Ether and the Crypto Market
While some experts predict institutional inflows of as much as $45B in the first 12 months of trading, Ether ETFs are expected to be smaller initially compared to Bitcoin ETFs. The approval signals a potential shift in the SEC’s stance towards crypto, following a lawsuit loss to Grayscale. The SEC’s regulatory approach to crypto has faced political scrutiny, with the Senate recently passing a resolution to withdraw an SEC staff bulletin on digital asset accounting rules. The lack of staking in Ether ETFs might limit their demand compared to Bitcoin ETFs, due to regulatory concerns around staking-as-a-service offerings.
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