SEC requests adjustments to proposed Ethereum ETF, sparking market speculation

The U.S. Securities and Exchange Commission (SEC) threw a curveball to the cryptocurrency industry by requesting improvements to the listing application for spot ether exchange-traded funds (ETFs) on major exchanges such as Nasdaq, CBOE, and NYSE. The surprising move hints at possible approval from regulators, according to sources familiar with the process.

Traditionally, SEC amendment requests come before approvals, indicating that the SEC’s stance on cryptocurrency ETFs may change. If approved, the approval could mark a significant milestone for the cryptocurrency sector, which has been expected to face regulatory hurdles.

This news has already caused a stir in the market, with the price of Ethereum rising noticeably. On Monday, Ethereum’s value surged 18%, reaching $3,773.19 by Tuesday evening. This is an increase of over 20% in 24 hours.

The SEC faces a deadline this weekend to decide on the application submitted by CBOE along with VanEck and ARK Investments/21Shares. The process typically involves two steps: exchange application and ETF registration statement, but the SEC’s involvement in this step suggests the approval process is likely to be accelerated.

The excitement surrounding these ETFs stems from the SEC’s pre-approval of an ETF linked to ether futures last October. But market participants braced themselves for rejection due to discouraging interactions with regulators. In particular, the SEC, led by cryptocurrency skeptic Gary Gensler, has historically rejected spot Bitcoin ETFs due to market manipulation concerns. But pressure mounted last year when Grayscale Investments won a legal battle, which led to the approval of a Bitcoin ETF that quickly attracted significant investment.

Renowned financial institution Standard Chartered doubled its forecast for approval of an Ether ETF this week. Geoff Kendrick, head of FX research and digital asset research at Standard Chartered Bank, estimates there will be significant inflows into ether upon approval. Potentially worth between 2.39 and 9.15 million ETH in the first year, equivalent to US$15 billion to US$45 billion.

Moreover, Kendrick offered an optimistic outlook on Ether’s price trajectory, suggesting that if the ETF receives approval, Ether could keep pace with Bitcoin with an expected price of $8,000 by the end of 2024. Furthermore, Standard Chartered’s analysis shows the price of Ether at $14,000 by the end of 2025, consistent with previous predictions.

However, amid this optimism, Ruslan Lienkha, Head of Markets at YouHodler, advised caution, predicting temporary heightened volatility in the market following the SEC’s decision. Lienkha suggests that while short-term fluctuations may occur, Ethereum’s long-term upward trend is likely to continue, especially considering its correlation with Bitcoin.

While the cryptocurrency market awaits the SEC’s ruling, all eyes are on the regulator and its potential impact on the future of Ethereum and the broader cryptocurrency landscape.

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