SEC Approves Ethereum ETFs, Enhancing the Crypto Market
The U.S. Securities and Exchange Commission (SEC) has approved a rule change allowing spot-equity ETFs to trade in the United States, including those based on Ethereum. This decision caused modest increases in the prices of Ethereum and Bitcoin, and significant gains in cryptocurrency stocks.
The SEC has authorized rule 19b-4 forms for eight ETF applications from major firms such as BlackRock, Fidelity, Grayscale, ARK Invest, VanEck, Invesco Galaxy, and Franklin Templeton. However, these ETFs still require approval of their S-1 registration statements before they can officially debut.
There is no specified timeline for when these forms will be accepted or when trading will commence. The approval for spot Bitcoin ETFs, which began trading on U.S. exchanges in January, set a precedent for this decision. Ethereum, the second-largest cryptocurrency, operates on a proof-of-stake consensus mechanism.
Matthew Sigel, head of digital assets research at VanEck, praised the decision, asserting that Ethereum is a decentralized commodity rather than a security. “We expect the improved political backdrop will lead to further victories for digital asset investors and developers,” he commented on social media platform X.
Following final approval, VanEck’s spot Ethereum ETF will start trading on the CBOE exchange.
Implications for the Crypto Industry
Sergey Nazarov, co-founder of Chainlink, highlighted the significance of the SEC’s approval, describing it as a major milestone for the crypto industry. “The Ethereum ETF approval is a second large step forward for the crypto industry,” Nazarov stated. Chainlink, which connects blockchains to real-world data, supports the view that capital markets are becoming increasingly involved in the crypto space.
Nazarov emphasized the potential growth for smart contracts and decentralized applications (dApps) as crucial use cases for Ethereum. Nathan McCauley, CEO of Anchorage Digital, echoed this sentiment, noting that Ethereum ETFs will have a similar impact to Bitcoin ETFs. Anchorage Digital focuses on institutional cryptocurrency custodianship and infrastructure.
“What the ETF wrapper did for Bitcoin is now possible for Ethereum,” McCauley told IBD. He suggested that the spot ETF provides a regulated and accessible pathway for institutional investment, potentially unlocking billions in capital.
According to Farside Investors, spot Bitcoin ETFs had received approximately $13.44 billion in inflows by May 23.
Ethereum Price Action
Following the news, Ethereum rose to $3,750 on Friday afternoon but remained below its Thursday high of $3,894. Earlier reports about the SEC’s potential step towards spot ETF certification had already boosted Ethereum prices.
Despite these gains, Ethereum is still trading below its 52-week high of $4,092 and its November 2021 record of over $4,800. Nonetheless, Ethereum has surged by over 64% in 2024.
Bitcoin also saw gains, rising to over $68,900 on Friday, nearing its Thursday high of $69,440. On Monday, Bitcoin surpassed $70,000, but it remains below its record high of $73,798 set on March 14. Bitcoin has also increased by around 64% this year.
Among cryptocurrency equities, Coinbase (COIN) rose 8.6% on Friday, breaking above its 50-day moving average. This followed a 5.5% drop on Thursday, which saw the stock fall below this key level.
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