ETFs
SEC Gives Green Light to Spotted Ether ETFs, But Ether Price Shows Little Movement
Ethereum the price barely moved despite the US Securities and Exchange Commission (SEC) giving the green light for a faster launch of Ether spot exchange-traded funds (ETFs) in the US.
Before the historic SEC approval, Ether fell 3.4%, rebounding around 5% shortly after. Currently, Ether is trading at $3,701, with a 24-hour trading volume of $47.5 billion, according to CoinMarketCap.
ETH 24-Hour Price Chart | Source: CoinMarketCap
On May 23, the SEC approved 19b-4 applications from financial giants such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy and Bitwise. This crucial approval allows these companies to list and trade spot Ether ETFs on their respective exchanges.
Hashdex was the only ETF issuer that did not receive regulatory approval that day.
However, the journey is not over for ETF issuers. They still need to get SEC approval for their S-1 registration statements before spot Ether ETFs can officially begin trading, which could take weeks or months.
“Typically, the SEC takes several weeks to a few months to review and provide comments on S-1 filings. This period involves a detailed review of files to ensure compliance with regulatory requirements. So, worst case scenario, we are looking at the end of summer,” Georgii Verbitskii, founder of TYMIO, told crypto.news.
TO BE CLEAR: This does not mean they will start trading tomorrow. This is simply a 19b-4 approval. It also requires approval of S-1 documents, which will take time. We expect this to take a few weeks, but it could take longer. I’ll know more in about a week!
–James Seyffart (@JSeyff) May 23, 2024
Meanwhile, the securities regulator’s May 20 directive to accelerate 19b-4 filings surprised many, including the notable removal of staking in several applications. The unexpected move sparked speculation about the motivations behind the SEC’s quick action.
Some in the industry suggest political pressure played a role. Prior to approval, a bipartisan group of lawmakers had urged the SEC to approve these ETFs, arguing that the precedent set by Bitcoin ETFs should extend to Ethereum.
Does SEC ETF Approval Mean ETH Is No Longer a Security?
Meanwhile, the approval of Ethereum ETFs is seen by industry experts as a subtle but significant nod from the SEC, implying that Ether is not considered a security.
“These are commodity-based trust stocks, so the SEC, by approving them, is explicitly saying they will not go after Ether as a security.” said Bloomberg ETF analyst James Seyffart on the Bankless podcast.
Digital assets advocate Justin Browder agrees: affirming that if Ether ETFs gain S-1 approval – the final hurdle to trading – then the “debate is over: ETH is not a security.”
Nonetheless, other market participants like Verbitskii believe that the SEC could still target ETH.
“The SEC’s approval of an Ethereum ETF does not mean that it no longer considers Ethereum to be a security. It simply means that the ETF meets regulatory standards for trading and investor protection (or at least they think so),” Verbitskii said.
Financial attorney Scott Johnsson also pointed out that the SEC did not confirm Ether’s insecure status in its approval order, saying it “completely skirted” the issue.
An official statement from the SEC and some of its commissioners is expected in the near future, which could provide further clarity on this issue.
The approval of spot Ether ETFs comes four and a half months after the SEC approved several applications for spot Bitcoin ETFs on January 10, marking an industry first. Following the latest announcement, industry experts have expressed their expectations for future growth.
Sumit Gupta, co-founder of CoinDCX, noted that the price of Bitcoin rose significantly after his ETF began trading in January, suggesting that a spot Ether ETF could see an upside of up to 60%.
“Bitcoin rose from $42,000 to over $73,000 in the two weeks after the ETF began trading on January 11. Data suggests that 10 US spot Bitcoin ETFs absorbed 548,556 BTC worth $36 billion in four months. Similarly, it is predicted that a spot Ether (ETH) ETF could generate a rally of up to 60%,” Gupta told crypto.news.
Lennix Lai, chief commercial officer of OKX, highlighted the potential for substantial institutional demand for the Ethereum spot ETF, envisioning an influx of passive capital from institutional players of approximately $300 million to $500 million over the course of the year. first week.
He highlighted the relevance of this development, noting that the design of Ethereum as a proof-of-stake (PoS) token could attract significant institutional interest.
“Plus, Ethereum offers more utilities than many realize. It is the must-have product for participating in DeFi products, such as staking. As such, the approval of the ETH ETF could potentially attract more users to engage with Web3 products,” Lai concluded.
However, some experts warn that the price of Ether may not increase immediately despite the historic approval.
Asal Alizade, co-founder of Blocklogica, explained that the main market change occurred with the approval of Bitcoin ETFs, which facilitated the entry of larger cash flows from traditional investment institutions. So, the approval of the Ether ETF might not lead to a drastic market change, but could gradually influence EVM-based assets and create minor trends in the crypto market.
Benjamin Charbit, CEO of Darewise Entertainment, added that the approval of the ETF had likely been in the works for some time, similar to the approval of the Bitcoin ETF earlier in the year. “I wouldn’t see that as a negative sign; on the contrary, it shows a form of maturity similar to what has been happening for decades in traditional finance (TradFi),” Charbit said.