Ethereum
SEC Approves Ethereum ETFs, Bringing ETH Closer to Commodities in Industry Victory
The United States Securities and Exchange Commission (SEC) approved the first Ethereum exchange-traded fund (ETF), marking a milestone for the crypto industry. The move, announced today, allows asset managers such as Grayscale, Fidelity and Bitwise to launch ETFs that directly track the price of Ethereum (ETH).
Ethereum rose 2% on the news and was trading at $3,900 at press time, based on CryptoSlate data.
The approval follows a rigorous application process and extensive market analysis. Craig Salm, General Counsel of Grayscale, Underlines that the SEC had already addressed key issues when approving spot Bitcoin ETFs, which are also applicable to Ethereum ETFs. These issues include origination and redemption processes, cash versus in-kind transactions, and custody issues. Salm pointed out that the SEC’s prior engagement with Bitcoin ETF issuers laid the groundwork for Ethereum ETFs, noting the strong correlation between ETH futures and spot prices as a compelling factor for approval.
The SEC’s decision comes after a period of uncertainty And skepticism among market analysts. Bloomberg analyst Eric Balchunas previously estimated a 25% chance of approval by May 23, citing the SEC’s lack of commitment to the Bitcoin ETF approval process. However, the approval of spot Bitcoin ETFs earlier this year, the approval of ETH ETFs in Hong Kong, and recent crypto victories in Congress have raised hopes among crypto supporters despite the SEC’s historically cautious stance under the direction of Gary Gensler.
The approval process included a public comment period, during which the SEC solicited comments on various aspects of the proposed ETFs, including fund custody, creation and redemption models, and sponsor fees. This phase mirrors the approach taken with the Bitcoin ETF spot applications, encouraging feedback from U.S. citizens and organizations.
The approval of Ethereum spot ETFs is expected to have a significant impact on the digital asset market. Hong Fang, president of crypto exchange OKX, note that while Ethereum’s price has risen this year, it has lagged behind Bitcoin’s gains, a disparity likely influenced by market anticipation of the SEC’s decision. This approval is expected to boost investor confidence and increase market liquidity.
Several issuers have filed apps to list their ETF on the NYSE Arca exchange, with Coinbase Custody acting as custodian. Bitwise’s analysis demonstrated a strong correlation between the ETH spot market and the CME ETH futures market, a critical factor in meeting the SEC’s requirements for monitoring potential market manipulation.
Despite the positive outcome, some in the industry have expressed concerns about the SEC’s approach. Participants in recent meetings with the SEC described the negotiations as one-sided, with agency staff refusing to comment substantively on the proposals. This contrasted with the detailed discussions that preceded the SEC’s approval of spot Bitcoin ETFs.
The approval also comes amid an ongoing regulatory review of Ethereum’s classification as a security or commodity. Reports suggest that the SEC is investigating the regulatory classification of Ethereum, which has added uncertainty to the approval prospects. However, today’s decision indicates a favorable stance towards Ethereum-based financial products and a potential indication that Ethereum can be considered a commodity.
This approval is a milestone for the crypto industry, reflecting the growing interest of traditional investment firms in crypto-asset financial products. As the market responds to this development, stakeholders will closely monitor the performance and impact of these newly approved ETFs.
Ethereum Market Data
As of press time, 10:20 p.m. UTC, May. 23, 2024, Ethereum is ranked #2 in terms of market capitalization and the price is up 2.97% in the last 24 hours. Ethereum has a market capitalization of $461.12 billion with a 24-hour trading volume of $41.29 billion. Learn more about Ethereum ›
Crypto Market Summary
As of press time, 10:20 p.m. UTC, May. As of December 23, 2024, the total crypto market is valued at $2.53 trillion with a 24 hour volume of $132.2 billion. Bitcoin dominance is currently at 52.57%. Learn more about the cryptocurrency market ›