In a surprising turn of events, the U.S. Securities and Exchange Commission (SEC) has approved eight spot Ethereum (ETH) ETFs. This last-minute decision involves major financial players like BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton.
While the SEC has approved the initial forms, the ETF issuers must now get their S-1 registration statements approved before trading can begin. This process, which has just started, could take weeks or even months. Bloomberg ETF analyst James Seyffart noted that while it could be completed in a few weeks with intense effort, it often takes three or more months.
A Sudden Shift in SEC’s Stance
Up until recently, it seemed unlikely that the SEC would approve these Ethereum ETFs due to a lack of engagement with issuers. However, this changed abruptly when the SEC began requesting swift submission of necessary forms. A bipartisan group of House lawmakers was urging the SEC to approve the ETFs for consistency and legal clarity. As the likelihood of approval grew, the discount on the Grayscale Ethereum Trust narrowed significantly, indicating positive market anticipation.
This unexpected shift has led to speculation that political factors might also be at play. Former President Trump has positioned himself as the top choice for crypto supporters, and Democrats have opposed President Biden’s veto threat on SEC-related crypto legislation, which could have resulted in this sudden change of stance on the subject.
Insights from Bitpanda’s CEO Eric Demuth
Eric Demuth, co-founder and CEO of Bitpanda, welcomed the SEC’s approval, calling it a long-overdue but very welcome development. He emphasized that despite the SEC’s view of ETH as a security, this approval unlocks a crucial part of the crypto market for institutional investors. Demuth highlighted that this move signifies the evolving landscape of the crypto industry and a step towards treating crypto assets like traditional ones.
Demuth pointed out that the approval opens doors to new institutional investors from the US, potentially leading to less market volatility. He also noted that even if the SEC had rejected the ETF, the positive future for ETH and the broader crypto space would remain unchanged.
Comparison with Bitcoin ETFs
The approval of Bitcoin ETFs has added significant value, with substantial increases in holdings. However, Ethereum ETFs may face challenges in achieving similar traction. Bloomberg ETF analyst Eric Balchunas estimates that Ethereum ETFs might attract 10 to 15% of the assets that Bitcoin ETFs have, which would still be a strong start.
The SEC’s approval of eight spot Ethereum ETFs marks a pivotal moment for the crypto industry. It not only indicates a shift in regulatory stance but also opens new avenues for institutional investment in Ethereum. This development promises a brighter and more stable future for the crypto industry, heralding a new era of institutional investment and market maturity.
