24/05/24

US: Ethereum ETFs approved by the SEC

As published on: cointribune.com, Friday 24 May, 2024. 

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.

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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ETFs SEC US Ethereum ETFs

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