US SEC Approves the Rule Changes Needed to Enable Ethereum ETFs

Several months after the approval of Bitcoin ETFs, the US Securities and Exchange Commission (SEC) is preparing the grounds for also enabling the launch of Ethereum Exchange-Traded Funds. Recently, the regulator approved the rule changes necessary to enable the ETH ETF launch.

The SEC Hesitate To Approve New Products Due To Scams and Fraud

The SEC’s new move is likely to enable the potential launch of 8 exchange-traded funds. However, while this is a significant step forward for the crypto sector, the journey is not yet over. A second round of approvals is required for the motion to officially move forward.

If it happens, crypto platforms such as BlackRock, Invesco, Fidelity, and ARK Invest will be able to launch ETFs that invest in Ethereum, the crypto industry’s second-largest cryptocurrency.

However, it is important to note that the fact that the first round saw the approval doesn’t guarantee that the second round will be equally successful, or that the rule changes will be fully implemented. The SEC Chair Gary Gensler recently said that the regulator is reluctant to instate further regulation due to the ongoing fraud among the sector’s leaders.

He said that it all comes down to the rampant non-compliance with the law of the United States. According to him, crypto industry activities come down to fraud and scams, which is a field where even some of the leading lights are now either in jail already, or awaiting jail, while others away extradition to face trial and once again, likely end up in jail.

However, the regulator is facing great pressure to enable Ethereum ETFs, as the demand for additional crypto ETFs only grew after the SEC gave the green light for 11 Bitcoin spot ETFs earlier this year.

There Is Appetite For Crypto ETFs, But The Risks Remain

Coincover’s head of partnerships, Alex Saleh, confirmed this by saying that the regulator’s move to change the rules to bring the industry closer to ETH ETFs shows that there is a massive appetite for crypto ETFs. Saleh believes that this appetite could bring fresh demand pressure on Ethereum spot prices since exposure to ETH would be opened to a wider pool of investors.

Commenting further, Saleh said that this is an exciting moment for the crypto community, but it is also important to remember that risks are still associated with these financial instruments, just like with any other.

“Volatility is a given, and widespread adoption of Ethereum ETFs would lead to fund managers accumulating large amounts of Ethereum across a range of custody methods. This will be a prime target for hacks, attacks, and possible human error. We anticipate greater expectations around risk mitigation and security capabilities, meaning security is paramount and must be a top priority for ETF managers.”