Home » Cryptocurrency

SEC Gives the Go-Ahead for Ethereum ETFs

Published on

The further mainstreaming of cryptocurrency in the U.S. took another big step forward on Thursday when the Securities and Exchange Commission approved a rule that clears the way for Ethereum exchange-traded funds (ETFs).

Specifically, the SEC approved a rule that would allow spot Ethereum ETFs to trade on U.S. stock markets. Spot Ethereum ETFs are different from the Ethereum ETFs that are on the market now, which are based on futures contracts.

Spot Ethereum ETFs invest directly in ether, the native crypocurrency of the Ethereum blockchain, just as an ETF would a stock. Thus, Ethereum ETFs give investors direct access to ether. Ether is the second-largest cryptocurrency after Bitcoin, trading at around $3,717 per token as of this writing.

This follows the SEC’s approval of spot bitcoin ETFs in January, which took the markets by storm. The 11 spot bitcoin ETFs that were approved have already amassed $12.5 billion in assets.

BlackRock’s iShares Bitcoin Trust is one of them, and BlackRock CEO Larry Fink recently declared that it is now the fastest-growing ETF in history.

Eight Ethereum ETFs are coming

The SEC’s ruling said that the proposals are “consistent with the rules and regulations thereunder applicable to a national securities exchange.”

Specifically, it said the proposals are consistent with laws that requires that the exchanges’ rules be designed to “prevent fraudulent and manipulative acts and practices” and, “in general, to protect investors and the public interest.”  

This was the same evaluation the SEC used to approve spot bitcoin ETFs in January.

This latest ruling paves the way for eight new Ethereum ETFs to trade on the U.S. markets. Specifically, it permits the Grayscale Ethereum Trust and the Bitwise Ethereum ETF to trade on NYSE Arca Exchange.

Additionally, the ruling allows the iShares Ethereum Trust to trade on the Nasdaq and the VanEck Ethereum Trust, the ARK 21Shares Ethereum ETF, the Invesco Galaxy Ethereum ETF, the Fidelity Ethereum Fund, and the Franklin Ethereum ETF to trade on the Cboe BZX Exchange.

“We applaud this decision, as we believe the evidence clearly shows that ETH is a decentralized commodity, not a security. ETH’s status as a commodity has now been recognized in a variety of circumstances, including the Commodity Futures Trading Commission (CFTC)’s regulation of ETH futures, public statements by Commission officials, rulings by federal courts, and now, hopefully, this ETF,” said Matthew Sigel, head of Digital Assets Research at VanEck.

What’s next?

While this is a big step, it does not mean the Ethereum ETFs can start trading on the various exchanges today. Before that can happen, each of the eight ETFs will have to file S-1 Registration statements with the SEC and receive approval before they can officially hit the markets.

That is largely seen as a formality, but as far as when the S-1 statements are approved, analysts at Bloomberg suggest that it could be a matter of weeks.  

The price of ether jumped some 27% this week to a high of around $3,932 on Thursday, as the news that the SEC would make this initial approval has been circulating since Monday.

Ether fell about 2% on Friday, perhaps due to the realization that the ETFs won’t start trading yet or projections from analysts at Goldman Sachs that interest-rate cuts won’t come until at least September.