Regulation
Here’s Why ETH Has Passed the Regulatory Milestone
Ethereum prices pulled back yesterday but are stable at the time of writing. Today, July 23, nine Ethereum spot ETFs began trading on various regulated exchanges, primarily the CBOE, Nasdaq, and NYSE.
The listing comes just two months after the U.S. Securities and Exchange Commission (SEC) reversed its decision and expedited the approval process for Form 19b-4s submitted by various parties, including Black rock.
Spot ETF launch brings regulatory clarity to ETH
With this historic milestone, Ethereum is the only crypto asset after Bitcoin to gain regulatory approval and a spot ETF approved by the otherwise strict regulator.
The derivative product’s listing is a win for Ethereum and its broader ecosystem, including a network of layer-2 solutions, a struggling non-fungible token (NFT) industry, and a recovering decentralized finance (DeFi) scene.
Taking at X, an observer Remarks that Ethereum is now poised for a perfect storm of bullish catalysts that would push the coin higher in the coming months.
Interestingly, while many proponents cite the expected influx of institutional capital into ETH via spot ETFs, the analyst believes the regulatory clarity that comes with the product is a major boon to the price and growth of its ecosystem.
In a post, the analyst explained that these long-standing headwinds, particularly resistance from the US SEC, have limited gains.
With the arrival of spot ETFs, these old growth headwinds will turn into tailwinds. This in turn will usher in a new era of unfettered adoption and investment, particularly from Wall Street investors who want regulatory clarity before they take any exposure.
A New Era for Ethereum? US SEC Remains Silent
As a condition of approving Form 19b-4s, the US SEC prohibited issuers from staking investors’ ETH. Staking would have allowed issuers to receive rewards from the network if they locked up ETH, helping to secure the network. Instead, spot ETF issuers must secure ETH through regulated custodians.
This precondition eased tensions, allowing the regulator to approve all S-1 registration forms before the products listed today. With these products available to investors, this effectively means an end to regulatory uncertainty surrounding ETH, especially after the transition from a proof-of-work to a proof-of-stake system in 2021.
Unlike the regulator’s stance on Bitcoin, which is considered a commodity, authorities have yet to confirm whether ETH is a commodity. However, the U.S. Commodity Futures Trading Commission (CFTC) has repeatedly stated that not only are Bitcoin and Ethereum commodities, but other cryptocurrencies like Litecoin fall under the same umbrella.
Main image from Canva, chart from TradingView