US Regulator Approves Applications to List Spot Ether ETFs
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On May 23, the US Securities and Exchange Commission (SEC) approved applications from BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton to list spot Ether exchange-traded funds (ETFs). This move potentially paves the way for these products to begin trading later this year.
Spot Ether ETFs Greenlight from SEC Shocks Crypto Communities
While the approved spot Ether ETFs forms have been approved, the ETF issuers still need their S-1 registration statements to go effective before trading can begin.
BOOM!! APPROVED! There it is. The SEC just approved spot #Ethereum ETFs. What a turn of events. It's really happening.
h/t @PhoenixTrades_ pic.twitter.com/KQ39mDyCbT
— James Seyffart (@JSeyff) May 23, 2024
The SEC has recently started conversations with issuers about their S-1 forms, but it is unclear how long this process will take. Some analysts speculate it could be completed in weeks, while others note it has historically taken over three months.
In response to the spot Ether ETF approval announcement, Bloomberg’s ETF analyst James Seyffart commented that if the issuers work extremely hard, the process could be completed within a few weeks, but there are many historical examples where it has taken over three months.
Yea. I think that if they work extremely hard it can be done within a couple weeks but there are plenty of examples of this process taking 3+ months historically
(obviously this situation is nothing like anything that's happened historically IMO)
— James Seyffart (@JSeyff) May 22, 2024
It had seemed unlikely that the SEC would approve the Ether ETFs due to a lack of engagement with issuers, which the crypto community has heavily criticized. However, this changed when the SEC began requesting 19b-4 forms from issuers, surprising many within the agency. This led to speculation about what prompted the regulator’s sudden shift, as analysts started to predict the SEC reassessing its decision on spot ETF approval.
Recall that a bipartisan group of US lawmakers had on May 22 sent a letter to the SEC to approve the spot Ether ETFs.
We urge SEC Chair @GaryGensler to approve the pending Ether ETP applications. @GOPMajorityWhip @RepJoshG @USRepMikeFlood @WileyNickel
Check out our letter to @GaryGensler below: pic.twitter.com/uv8Sp8lqUx
— French Hill (@RepFrenchHill) May 23, 2024
They argued that the SEC should apply the same principles for spot Bitcoin ETFs approved earlier this year, demonstrating consistency and affirming the legal reasoning behind those decisions.
Meanwhile, there is speculation that Ethereum ETFs may not achieve the same traction as Bitcoin ETFs. Bloomberg ETF analyst Eric Balchunas estimated that spot Ether ETFs might capture only 10 to 15% of the assets that Bitcoin ETFs received.
Mainstream Adoption of Crypto Set to Kickoff
The US SEC’s latest approval provided another tailwind for the cryptocurrency industry’s push into mainstream finance.
Earlier this week, WisdomTree received approval from the Financial Conduct Authority (FCA) to list its cryptocurrency exchange-traded products (ETPs), WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW), on the London Stock Exchange (LSE). These products will be offered exclusively to professional investors.
We are thrilled to announce that the Financial Conduct Authority (FCA) has approved the prospectus for our WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW) ETPs.
Read the press release for more info: https://t.co/4b4vXPTanm pic.twitter.com/73GObGBCMQ
— WisdomTree in Europe (@WisdomTreeEU) May 22, 2024
On the same day, the US House of Representatives passed a landmark cryptocurrency bill, the Financial Innovation and Technology for the 21st Century Act (FIT21 Act), which aims to provide regulatory clarity for cryptocurrencies. The Republican-led bill garnered bipartisan support, passing with 279 votes in favor and 136 against.
#PASSED: In a watershed moment for the U.S. digital asset ecosystem, the House passes the Financial Innovation and Technology for the 21st Century Act with overwhelming bipartisan support.
🚂 Next stop for #FIT21, the Senate.
👇 Read more 🔗https://t.co/KhCNE1vD0l pic.twitter.com/Equez1geX5
— Financial Services GOP (@FinancialCmte) May 22, 2024
The FIT21 Act proposes a framework that would exempt cryptocurrencies from many securities regulations if they achieve sufficient decentralization. This contrasts with the SEC’s current approach to crypto regulation and would likely place much of the industry outside the SEC’s jurisdiction.
While the FIT21 Act still needs to pass the Senate, its extensive bipartisan support marks a major endorsement for the industry.