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SEC Paves Way for Ethereum ETFs to Boost Cryptocurrencies
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The US Securities and Exchange Commission has cleared the way for the potential launch of eight exchange-traded funds tied to the world’s second-largest digital currency, following the regulator’s approval of the first bitcoin ETFs earlier this year. year.
The regulator on Thursday approved rule changes supporting ETFs that invest in ether, the native cryptocurrency of the ethereum blockchain, for several groups including BlackRock, Fidelity, Invesco and Ark Invest. A second round of approvals will be required before the products can be launched.
The widespread wait for approvals has sent the price of ether is skyrocketing more than 20% since Monday and more than 60% since the beginning of the year.
This is a significant regulatory change for the SEC after months of silence on the issue. The SEC suddenly provided feedback to issuers and exchanges on pending filings on Monday, setting off a flurry of paperwork and reviews. According to data from Bloomberg Intelligence, the SEC faced Thursday and Friday deadlines to respond to ether ETF requests from VanEck and Ark, respectively.
“This is a critical step in offering access to Ethereum through the ETF structure, which will offer U.S. investors easier access, greater protection and safeguards,” Invesco and Galaxy, a digital asset group, said in a statement Thursday evening. “We hope this approval indicates the SEC’s willingness to approve the launch of these products.”
“I think most of us are resigned to the arrival of a disapproval order,” said Katherine Dowling, general counsel at Bitwise Asset Management, one of 11 U.S. issuers of bitcoin ETFs and which has filed to launch a Ether ETF.
It’s unclear if and when the SEC will grant the second round of approvals needed before the products can be launched.
SEC Chairman Gary Gensler explained his reticence to allow cryptocurrency investment products to be launched in the US market at an Investment Company Institute conference on Thursday morning. He referred to the myriad of fraud cases that have hit the cryptocurrency industry, such as that of FTX founder Sam Bankman-Fried, who was sentenced to 25 years in prison in relation to billions of dollars missing from his cryptocurrency exchange.
“This is about rampant non-compliance with US law,” Gensler told ICI CEO Eric Pan. “These are frauds and scams. This is a field where some of the industry’s top leaders are now in prison, awaiting prison, awaiting extradition.”
The SEC last year lost an average of judicial battle with Grayscale Investments over the asset manager’s push to convert its flagship bitcoin trust into an ETF. After that decision, the regulator – with apparent reluctance – approved Grayscale’s bitcoin product and 10 other new ETFs launch early this year.