ETFs
SEC Set to Bless Ether ETFs, Encourages Cryptocurrency Fans
The Securities and Exchange Commission has almost entirely approved trading in securities based on ether, a form of cryptocurrency. Many experts expect this to soon open the door to ether ETFs, or exchange-traded funds.
The security would be in what is called a spot ether ETF. So instead of buying the cryptocurrency directly, someone would do it for you. More specifically, an asset manager.
“It really takes some of the friction out of the process,” said Ari Redbord, head of policy at TRM Labs.
Normally, you need to create a crypto wallet and use an exchange.
“Here, you do it through traditional investment mechanisms,” Redbord said, like a brokerage account or a financial advisor who may already be managing your savings.
Redbord, which investigation the use of crypto in money laundering, said asking people to invest through an ETF could reduce this activity.
“This space is already very regulated,” he said.
Ether works a little differently than Bitcoin, a more popular cryptocurrency: coin transactions are verified by a subset of people who hold them. That may have made the SEC uncomfortable, said Jack Graves, a professor at Syracuse University Law School.
“I think there have been concerns about potential control or manipulation,” he said.
Could the value of the coin be manipulated by a small group of people responsible for verifying the coins? We had to develop tools to pay attention to this.
“That ended up being the way that the SEC was able to get to a more comfortable place,” said Katherine Dowling, chief compliance officer at Bitwise Asset Management, which provided the SEC with research on how the fraud could be detected.
A few more steps need to be taken before people can buy and sell ether spot ETFs, but when that happens, Dowling said, many more people will be able to trade the currency. Since ether’s crypto cousin, bitcoin, according to data firm FactSet became available as a spot ETF in Januarypeople invested $15 billion in it.
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