Ethereum
What does the ETH ETF mean for crypto? – Forbes Advisor
Editorial note: We earn commission from partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.
The U.S. Securities and Exchange Commission has taken the first steps in approving Ethereum (ETH) spot exchange-traded funds, or ETFs, for trading on U.S. exchanges.
On May 23, the SEC approved exchange applications to list and trade ether spot ETFs, paving the way for approval of the funds themselves. Until now, only Ethereum futures ETFs had been approved for trading in the United States.
ETFs are investment vehicles similar to mutual funds. However, they trade more similar to stocks, on traditional exchanges. Futures contracts are complex derivative investments that track the future price of an asset. In contrast, a spot ETF tracks the current price of an investment.
Today, crypto fans and investors are rightly wondering what the potential approval of ETH ETFs means for Ethereum and the rest of the crypto industry.
SEC Approves Exchange Listings for Spot Ethereum ETFs
On May 23, the SEC published a change of rule This will allow three different exchanges to list and trade eight spot ether funds. Exchanges whose applications have been approved (and the ETFs they will potentially list) include:
- NYSE Arca. Grayscale Ethereum Trust and Bitwise Ethereum ETF
- Nasdaq. iShares Ethereum Trust
- CBOE BZX. VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund and Franklin Ethereum ETF
While this is a huge win for ETH ETF supporters, issuers still need to obtain SEC approval before the funds can officially begin trading. This process can take weeks or even months, and it is not guaranteed that all funds will be approved.
Still, given that the chances of approval seemed slim before Monday, May 20, this is a significant development.
On May 20, reports began circulating that the SEC was requesting updated information from potential issuers. This sparked new hope among crypto analysts and investors that spot ETFs were indeed ready for approval before the May 23 deadline.
Previously, many believed that ETFs were going to be rejected due to the SEC’s apparent lack of interest in the applications. However, as investor optimism turned, ETH rose over 20% ahead of the deadline.
Following the SEC’s decision, both Ethereum And Bitcoin has seen relatively muted price development, likely due to the fact that approval has been built into the price and more approvals are needed before negotiations begin.
What ETH ETF Approval Means for Ethereum
Perhaps the biggest impact of the ether spot ETF approvals is the insinuation that Ethereum is a commodity rather than a security.
Although the SEC did not explicitly state that Ethereum was a commodity, the ETF products referenced in the ruling were defined as “commodity-based trust stocks.” This wording largely ends the debate over how to classify unstaked Ethereum.
The implications of this classification are potentially significant and far-reaching. For starters, if more cryptocurrencies are classified as commodities, the SEC’s role in regulate cryptocurrencies could be more limited. Regulation could instead fall more to the U.S. Commodity Futures Trading Commission, or CFTC.
Regardless of the ETH ETF decision, a bipartisan bill recently passed by the U.S. House of Representatives would effectively split regulation between the SEC and CFTC. The SEC would regulate cryptocurrencies as securities and the CFTC would handle any crypto regulation related to commodity classifications.
Additionally, classification as a security could affect various other companies and cryptocurrencies involved or feared to be involved. dispute with the SEC. Coinbase previously cited the SEC’s ruling in an interlocutory appeal on Friday, May 24, just one day after the decision was released.
XRP, SOL: next on the list?
Although Ethereum spot ETFs have yet to receive full approval, some are already beginning to speculate on which crypto could be next to get its own spot ETF.
The main speculations on such speculations are Ripple’s XRP (XRP) and Solana (SOL). Especially, Solanaa rival to Ethereum, appears to be the next concern for analysts and investors.
SOL is the fifth largest crypto by market capitalization, with only Stablecoin Tether (USDT) and Binance Coin (BNB) between it and ETH. Given the similarities in its underlying technology, many believe the SEC would have a hard time denying Solana a spot ETF now that it has moved toward approving Ethereum.
While this prospect is certainly exciting for crypto enthusiasts, it is important to note that if it happens, it won’t be for some time, likely 2025 at the earliest.
Crypto pushes towards mainstream acceptance
After years of legal battles and resistance from the SEC, the crypto industry appears to be receiving a warmer welcome from the regulatory agency.
Softer regulatory actions from the SEC – and an apparent change of heart among several politicians and parties – could signal a new era of crypto acceptance in traditional finance.
Former President Donald Trump recently changed his stance on cryptocurrency, posting his support on social media and even beginning to accept cryptocurrency donations for his 2024 presidential campaign.
Additionally, many have speculated that the SEC’s last-minute decision to take this first step to approve Ethereum spot ETFs may have come from political pressure within President Joe Biden’s administration.
Either way, one thing is certain. Nobody wants to be on the bad side of crypto these days. This bodes well for the future of the crypto industry.