U.S. Securities and Exchange Commission recently made history when they approved three spot Ether ETFs – just months after greenlighting Bitcoin ETFs. This move represents an apparent change in attitude toward crypto, potentially opening the way for mainstream investment in Ethereum.
Highlights:
| Aspect | Details |
|---|---|
| Event | Approval of three spot Ether ETFs by the U.S. SEC. |
| Significance | Marks a shift in the SEC’s attitude towards crypto, potentially increasing mainstream investment in Ethereum. |
| Comparison | Follows previous approval of Bitcoin ETFs, highlighting Ether as the second-largest cryptocurrency by market cap. |
| Advantages of Ether ETFs | Provides investors access to Ethereum network applications like DeFi, NFTs, and tokenization of real-world assets. |
| Asset Managers Involved | VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, Bitwise. |
| Approval Process | SEC approved 19b-4 filings but each issuer needs SEC approval on their S-1 registration statements before trading can begin. |
| Timeline | Approval of S-1 registration statements could take days to months. |
| Regulatory Changes | Applicants expedited 19b-4 filings following SEC direction, with the primary change being the removal of staking. |
| Market Reaction | ETH price temporarily spiked above $3,900 following the approval news. |
| Implications | Indicates increased regulatory acceptance of cryptocurrencies as legitimate asset classes. |
| Comparison to Bitcoin ETFs | Ether ETFs may initially have smaller asset pools compared to Bitcoin ETFs, with Grayscale Ethereum Trust managing about $11 billion – lower than before conversion to Ether. |
| Future Steps | Each issuer awaits SEC approval on their S-1 registration statements; Hashdex’s spot Ether ETF application submitted by May 30 is still pending. |
Approval Details
The SEC’s approval of Ether ETFs comes after recent developments in cryptocurrency regulation. For example, the U.S. House of Representatives recently passed legislation designed to bring more clarity for industry players, and subsequent legal battles over ETFs by various companies and traders have seen legal approval granted or denied from time to time.
- Ether represents an important milestone for the crypto industry as it stands as the second-largest cryptocurrency by market cap, second only to Bitcoin.
- Bitcoin ETFs are often seen as long-term value storage tools; Ether ETFs give investors access to Ethereum network applications like DeFi, NFTs, and tokenization of real-world assets. Asset managers were quick to welcome this news, with VanEck being among those to quickly react by issuing an advertising campaign called “Enter the Ether” within an hour of its announcement, highlighting Ether’s potential as a means for creating a “less centralized and open-source economy.
Major Asset Managers Are Involved
- On May 23, 2024, the Securities and Exchange Commission approved 19b-4 filings by major asset managers like VanEck, BlackRock, Fidelity, Grayscale Franklin Templeton ARK 21Shares Invesco Galaxy, and Bitwise for Ether Exchange-Traded Funds (ETFs).
- Even though their 19b-4 filings have been approved, each Ether ETF issuer still requires SEC approval on their S-1 registration statements before they can start trading, which analysts anticipate could take days, weeks, or even months.
- On May 20, the SEC directed applicants to expedite their 19b-4 filings, with the removal of staking being the primary change observed across various filings.
Further Steps
Although the SEC has approved 19b-4 filings from several major asset managers for Ether ETFs, additional steps are still necessary before these funds can start trading.
- Each ETF issuer must obtain SEC approval on their S-1 registration statements, which could take anywhere from days to months, according to industry analysts.
- Hashdex had submitted its spot Ether ETF application by May 30 to the SEC; its fate remains uncertain, and they have not announced any decision yet.
Market Reaction and Implications
After hearing that spot Ether ETF approvals had an immediate impact on the cryptocurrency market, ETH price temporarily spiked above $3,900 before quickly falling back down below it following the SEC announcement. ETFs offer institutional and retail investors regulated and accessible ways of investing in the second-largest cryptocurrency, Ethereum.
- Ether Exchange Traded Funds (ETFs), like Bitcoin ETFs, indicate U.S. regulators are becoming more accepting of cryptocurrencies as legitimate asset classes.
- Ether ETFs may initially have smaller initial asset pools compared to their Bitcoin equivalents, with Grayscale Ethereum Trust managing about $11 billion of assets – significantly lower than what was being managed before conversion to Ether.
