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Crypto: Ethereum ETFs approved by the SEC!

Fri 24 May 2024 ▪ 4 min of reading ▪ by Luc Jose A.
Getting informed Investissement

The crypto ecosystem is abuzz following the stunning announcement from the SEC: the approval of Ethereum ETFs. This decision, which could redefine institutional investors’ access to digital assets, comes at an important time for the market. While Bitcoin had already paved the way with its own ETFs earlier this year, Ethereum, the second-largest cryptocurrency by market capitalization, is set to gain unprecedented exposure in traditional financial markets.

ETF ethereum

The Historical Approval of Ethereum ETFs

Last night, the United States Securities and Exchange Commission (SEC) took a decisive step by approving several applications for Ethereum ETFs, marking a significant breakthrough for the second-largest crypto. Among the companies that received SEC approval are financial giants such as BlackRock, Fidelity, Grayscale, VanEck, Franklin Templeton, Ark/21Shares, and Invesco/Galaxy. This approval pertains to the 19b-4 forms, essential for setting up these funds, but there remains a crucial step: the approval of the S-1 forms, necessary before the ETFs can be marketed.

James Seyffart, an analyst at Bloomberg, highlights the unexpected nature of this decision by stating: “A week ago, I would have said you were a bit crazy to think these ETFs would get SEC approval.” This remark underscores the rapidity and unpredictability of the SEC’s shift in position, which until recently seemed reluctant to engage in discussions with Ethereum ETF issuers.

Grayscale, one of the companies benefiting from this approval, expressed its satisfaction through a spokesperson: “At Grayscale, we appreciate the opportunity to collaborate constructively with regulators as they review Ethereum ETFs, and we remain optimistic about the potential to bring Ethereum into the U.S. regulatory framework through ETFs.”

Towards a New Investment Paradigm

While the approval of the 19b-4 forms suggests a willingness by regulators to allow the commercialization of Ethereum ETFs, it does not guarantee final approval of the S-1 forms. According to James Seyffart, “There is likely to be a delay before we see S-1 approvals and these ETFs begin trading. My estimate is that it will take at least a week, but probably longer. If history is any guide, it could take much longer and be measured in months.” This statement reflects the uncertainty that still hangs over the exact launch timeline of these new financial products.

In any case, the SEC’s approval of Ethereum ETFs is not only a significant step for the issuers of these products, but it could also have profound repercussions on the crypto market as a whole. This decision follows the successful introduction of Bitcoin ETFs in January, which quickly attracted $13.3 billion in net inflows, setting performance records for ETFs at their launch. The arrival of Ethereum ETFs could see similar success, attracting a new influx of capital into the second-largest cryptocurrency.

This SEC turnaround comes amid pro-crypto movements within the U.S. Congress, where several recent votes have shown growing support for crypto-friendly legislation. For example, last week, the Senate passed a resolution to repeal Staff Accounting Bulletin 121, thereby facilitating the offering of cryptocurrency custody services by regulated banks. Additionally, the House of Representatives approved the Financial Innovation and Technology for the 21st Century Act (FIT21), which is expected to bring much-needed legal clarity for cryptocurrencies.

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Luc Jose A. avatar
Luc Jose A.

Graduated from Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I committed to raising awareness and informing the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of the news, decipher market trends, relay the latest technological innovations, and put the economic and societal issues of this ongoing revolution into perspective.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.