Ethereum
Ethereum ETFs approved in sharp reversal of SEC policy
In a stunning turnaround, the United States Securities and Exchange Commission (SEC) announced on Thursday that it had approved eight Ethereum spot ETF applicationsthus giving the green light to Ethereum trading on Wall Street.
The following funds were approved in the filing: Converted Grayscale Ethereum Trust, Bitwise Ethereum ETF, iShares Ethereum Trust, VanEck Ethereum Trust, ARK/21 Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund and the Franklin Ethereum ETF.
When will Ethereum spot ETFs start trading? It won’t be tomorrow. James Seyffart, ETF expert at Bloomberg suggested in a tweet that it could be “a few weeks” before fund managers’ S-1 filings are approved to allow trading.
Just a week ago, most financial experts and crypto industry leaders had written off such a result as more and more improbable. On the one hand, the SEC has given little indication that it intends to move forward with one-time ETH ETF applications before the looming May 23 deadline.
Additionally, just weeks before, a lawsuit filed by Ethereum software company Consensys against the SEC alleged that the regulator had secretly considered ETH has been an illegal security and has been unregistered for over a year. (Disclosure: Consensys is one of 22 investors in Decrypt.) If the SEC were to officially qualify ETH as a security, then Ethereum ETFs would have to be approved through a different process than is currently underway.
So, by approving spot ETH ETFs today, the SEC has tacitly acknowledged that ETH is not a security in itself. Such an outcome is a major victory for crypto advocates, given ETH’s crucial role in supporting the Ethereum network, upon which many of the industry’s most important projects and services rely.
But above all, in order to cross the finish line, several ETH ETF issuers abandoned language of their applications this week regarding ETH client staking. Since Ethereum moved to a proof-of-stake system in September 2022, ETH holders were able to deposit their funds onto the network to accumulate rewards. The SEC has long taken the see that when a financial intermediary offers staking services, it is engaging in an illegally unregistered securities system.
Spot Ethereum ETF, unlike ETH futures ETFs, which track derivative contracts and have been approved by the SEC. in October– imply that issuers actually purchase and store ETH on behalf of their customers. Now that spot ETH ETFs have been approved, traditional financial institutions and investors will soon be able to gain exposure to ETH without holding crypto themselves.
Today’s historic action follows that of the SEC approval on eleven Bitcoin ETF spot applications in January. Since then, spot Bitcoin ETFs have attracted nearly 13 billion dollars in net inflows.
“I’ve always called the point of approval for Bitcoin ETFs, the Bitcoin IPO,” said Cody Carbone, policy director at crypto lobbying group Digital Chamber of Commerce. Decrypt. “This is the ETH IPO. That’s a huge seal of approval.
Edited by Andrew Hayward
Editor’s note: This story was updated after publication with additional details.