index
In a landmark move, the U.S. Securities and Exchange Commission (SEC) has approved an all-spot Ethereum ETF, paving the way for the product to begin trading later this year.
The green light to discover an Ethereum ETF comes after intense speculation that the Securities and Exchange Commission is considering treating ETH as a security.
Spot Ethereum ETF Receives SEC Approval
The SEC's decision marks the approval of the second cryptocurrency-based ETF in the United States. This also marks a significant shift in access for institutional investors to the world's second-largest cryptocurrency. In a May 23 filing, the Securities and Exchange Commission approved 19b-4 filings from issuers including BlackRock, VanEck, Fidelity, Franklin Templeton, Grayscale, ARK 21Shares, Bitwise and Invesco Galaxy. If the rule change is approved, spot Ethereum ETFs could be listed and traded on the exchange. The approval came as a surprise to many in the cryptocurrency industry, with expectations that the SEC would reject the filing. Andrew Jacobson, vice president and head of legal affairs at 21Shares, said this is a very exciting moment for the industry and also an important step for ETF trading.
Although the Securities and Exchange Commission has approved the 19b-4, a spot Ethereum ETF will still need to sign the issuer's S-1 registration statement to officially begin trading. Analysts have speculated that this could take days, weeks or even months. The SEC directed applicants to accelerate their 19b-4 filings on May 20, and the elimination of staking was the most notable modification across filings. There is no timeline for approval of the S-1 registration statement, but sources have hinted the issuer is ready to launch, although the SEC's corporate finance division may request changes in the coming days and weeks.
SEC's U-Turn On Spot Ethereum ETF
The market was skeptical about approval, but the winds began to change when Bloomberg increased the odds of approval from 25% to 75%. Following this increase, the market is beginning to speculate that a spot Ethereum ETF could receive SEC approval. Rob Marrocco, global head of ETP listings at Cboe Global Markets, said:
“The introduction of a spot Bitcoin ETF has already shown significant benefits to the digital asset and ETF space, and we believe a spot Ether ETF will similarly provide safeguards for U.S. investors.”
The SEC has consistently rejected spot Bitcoin ETFs for over a decade, citing concerns about market manipulation. However, it had no choice but to approve it after Grayscale won a court case last year. Sui Chung, CEO of CF Benchmarks, said Ether is much more complex than Bitcoin and it could take months for the SEC to review it. However, he added that “there are limits to how slow rolling the SEC can do” because spot Bitcoin ETFs already provided an established template.
House of Representatives votes in favor of FIT21
The Securities and Exchange Commission's approval comes a day after the U.S. House of Representatives voted in favor of a bill that would provide greater regulatory clarity to the cryptocurrency industry. The 21st Century Financial Innovation and Technology Act separates the roles of the SEC and the Commodity Futures Trading Commission, but requires Senate approval and must be signed into law.
The SEC's decision significantly strengthens the cryptocurrency industry's efforts to enter mainstream finance. Earlier this week, UK regulators also approved a listed cryptocurrency product.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.
Investment Disclaimer
