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The U.S. Securities and Exchange Commission (SEC) has made a landmark decision by approving applications from Nasdaq, CBOE, and NYSE to list exchange-traded funds (ETFs) tied to the price of ether (ETH). This ETH ETF approval is a significant development for both the cryptocurrency industry and investors, potentially paving the way for these products to begin trading later this year.
ETH ETF Approval: A Surprising Win for Crypto Firms
While the ETF issuers still need to secure final approval before the products can launch, Thursday’s ETH ETF approval represents a major victory for the firms involved and the broader cryptocurrency community. Until recently, the industry had anticipated that the SEC would reject these filings. Nine issuers, including prominent names such as VanEck, ARK Investments/21Shares, and BlackRock, are vying to launch ETFs tied to the second-largest cryptocurrency by market capitalization.
“This is an exciting moment for the industry at large,” said Andrew Jacobson, Vice President and Head of Legal at 21Shares, noting that the ETH ETF approval is “a significant step” towards getting the products trading. Thursday marked the SEC’s deadline to decide on VanEck’s filing, and market participants had been bracing for a rejection due to the SEC’s lack of engagement with the applications.
SEC’s Sudden Change of Heart
In a surprising turn of events, SEC officials on Monday requested that the exchanges quickly fine-tune their filings, prompting a scramble to complete weeks of work in just days. This rapid adjustment indicates a sudden shift in the SEC’s stance, but the reasons behind this change remain unclear.
“The introduction of spot bitcoin ETFs has already demonstrated significant benefits for the digital assets and ETF space, and we believe that spot ether ETFs will similarly provide safeguards for U.S. investors,” said Rob Marrocco, Global Head of ETP Listings at Cboe Global Markets.
While Nasdaq and NYSE have declined to comment, SEC Chair Gary Gensler, a known crypto skeptic, also refrained from commenting on the ETH ETF approval when questioned at an industry event earlier on Thursday. An SEC spokesperson, in an email announcing the approval, stated that the agency would not provide further comments.
Next Steps for ETH ETF Launch
The exchange applications sought SEC approval for a rule change required to list new products. However, the issuers must still obtain SEC approval for ETF registration statements that detail investor disclosures before the ETFs can begin trading. Unlike the exchange filings, there is no set timeframe for the SEC to make a decision on these statements. Industry participants remain uncertain about how long this process might take.
Two sources familiar with the process revealed that many issuers are prepared to launch their ETFs. However, the SEC’s corporate finance division is expected to request changes and updates in the coming days and weeks. The ETH ETF approval is reminiscent of the SEC’s previous handling of spot bitcoin ETFs, which faced repeated rejections over market manipulation concerns before being approved following a successful court challenge by Grayscale Investments.
Implications of ETH ETF Approval
Sui Chung, CEO of CF Benchmarks, the index-provider for several bitcoin and ether ETFs, emphasized that ether is more complex than bitcoin, which might prolong the SEC’s review of the registration statements. However, with the precedent set by bitcoin ETFs, “there’s only so much slow rolling” the SEC can do, he noted.
Investors, including hedge funds, wealth advisors, and retail investors, have already poured more than $30 billion into crypto ETFs. The ETH ETF approval is another significant boost for the cryptocurrency industry’s efforts to integrate with mainstream finance. This week, the UK regulator also approved listed cryptocurrency products, and the U.S. House of Representatives passed a landmark bill aimed at providing regulatory clarity for cryptocurrencies. Although the bill still needs to pass the Senate, its broad bipartisan support marks a major endorsement for the industry.
A New Era for Cryptocurrency Investment
The ETH ETF approval by the SEC signifies a crucial step forward for the cryptocurrency market, offering new opportunities for investors and further legitimizing digital assets in the financial sector. As the industry prepares for the launch of these ether ETFs, the move is expected to provide enhanced safeguards for investors and drive further integration of cryptocurrencies into mainstream finance. This development underscores the growing acceptance and maturity of the crypto market, heralding a new era for Ethereum and its place in the global financial ecosystem.
