SEC Provides Approval for Ethereum ETF
The mainstreaming of cryptocurrencies in the United States took another big step Thursday when the Securities and Exchange Commission approved rules that clear the way for an Ethereum exchange-traded fund (ETF).
Specifically, the SEC approved rules allowing spot Ethereum ETFs to trade on U.S. stock markets. Spot Ethereum ETFs are different from the Ethereum ETFs currently on the market, which are based on futures contracts.
Spot Ethereum ETFs invest directly in Ethereum, the native cryptocurrency of the Ethereum blockchain, just as ETFs invest in stocks. Therefore, the Ethereum ETF provides investors with direct access to Ethereum. Ethereum is the second-largest cryptocurrency after Bitcoin, trading at around $3,717 per token at the time of this writing.
This hit the market after the SEC approved a spot Bitcoin ETF in January. The 11 approved spot Bitcoin ETFs have already amassed $12.5 billion in assets.
BlackRock’s iShares Bitcoin Trust is one of them, and BlackRock CEO Larry Fink recently declared that it is the fastest-growing ETF in history.
8 Ethereum ETFs are launched
The SEC’s ruling said the proposal was “consistent with the rules and regulations applicable to national securities exchanges.”
In particular, it said the proposal is consistent with laws requiring exchanges’ rules to be designed to “prevent fraudulent and manipulative acts and practices” and “protect investors and the public interest generally.”
This was the same assessment the SEC used when approving a spot Bitcoin ETF in January.
The ruling paves the way for eight new Ethereum ETFs to be traded on US markets. Specifically, it allows Grayscale Ethereum Trust and Bitwise Ethereum ETF to be traded on the NYSE Arca Exchange.
The ruling also allows the iShares Ethereum Trust to trade on Nasdaq and allows the VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF to trade on the Cboe BZX Exchange.
“We applaud this decision as the evidence clearly shows that ETH is a decentralized product and not a security. ETH’s status as a commodity will now depend on the Commodity Futures Trading Commission’s (CFTC) regulation of ETH futures, public statements from commission officials, federal court rulings, and now, hopefully, the ETF, said Matthew Sigel, head of digital asset research at VanEck.
What are your future plans?
This is a big step forward, but it doesn’t mean that Ethereum ETFs can start trading on various exchanges today. Before that can happen, each of the eight ETFs must file an S-1 registration statement with the SEC and receive approval before it can officially hit the market.
Although this is largely considered a formality, as far as the S-1 statement being approved, Bloomberg analysts suggest it could take several weeks.
As news spread on Monday that the SEC would give this initial approval, the price of Ether has surged about 27% this week, reaching a high of about $3,932 on Thursday.
Ethereum fell about 2% on Friday, perhaps due to the perception that ETFs will not begin trading yet or expectations from Goldman Sachs analysts that interest rate cuts will not occur until at least September.
