Breaking: US SEC Approves 8 Spot Ethereum ETF

The U.S. Securities and Exchange Commission (SEC) has approved 8 multiple spot Ethereum ETFs through an omnibus order. 

This approval follows the recent approval in January of spot Bitcoin ETFs, which is a positive development for investment products in the digital assets space in the U.S.

Spot Ethereum ETFs Approval Process

The SEC has approved the 19b-4 filings from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. These approvals were granted on 23rd May 2024, which signified a change of tune for the SEC regarding Ethereum ETFs.

This decision was rather unexpected due to the inactivity of the SEC in engaging with issuers, which raised questions about the approval of the proposal in the first place. However, Hashdex, whose application was due on May 30, was not in the list of approved firms.

These ETFs are slated to be hosted on three national exchanges: CBOE, NYSE ARCA, and NASDAQ – thus increasing Ethereum’s availability to a broader pool of investors.

Despite the approval of the 19b-4 forms, trading cannot begin until issuers receive approval for their S-1 registration statements. According to James Seyffart of Bloomberg, if the process were to be fast-forwarded, it may take a few weeks to complete, although, there have been instances where such approvals have taken over three months.

House Lawmakers Push For Ethereum ETF

Political pressure could have played a role in the approval of these Ethereum ETFs as many people did not expect them to be approved. Earlier in the day, a group of House lawmakers (incl Majority Whip Tom Emmer and NJ Democrat Josh Gottheimer) had called for the SEC to approve the ETFs through a letter.

A bipartisan group of House lawmakers (incl Majority Whip Tom Emmer and NJ Democrat Josh Gottheimer) have sent Gary Gensler a letter urging the SEC to approve spot Ether ETFs (and 'other' digital assets) bc it offers investors crypto access in regulated transparent safe format pic.twitter.com/YLSJh6n0lF

— Eric Balchunas (@EricBalchunas) May 23, 2024

They pointed out that the approval of such a product would be more consistent with the standards applied by the SEC after embracing the approval of spot Bitcoin ETFs earlier this year.

This political pressure is considered as one of the possible explanations for the SEC’s change of heart. This is a complete turn from the agency’s position of engaging with issuers which began earlier this week. Some insiders in the SEC opined that some parts of the agency were caught off guard by this quick approval.

What are the Next Steps

However, according to market experts such as Bloomberg’s Eric Balchunas, Ethereum ETFs could have a different outcome as compared to Bitcoin ETFs. He estimates that Ethereum ETFs could attract between 10-15% of what bitcoin ETFs are expected to garner, say $5-$8 billion in the first few years.

This projection, although less ambitious compared to that of Bitcoin ETFs, is still deemed significant for a new investment product.

I think me comparing Ether ETFs following Bitcoin ETFs to a concert where Sister Hazel comes on after Nirvana is prob why a few ppl coming at me on this and that's ok. Maybe that was harsh but I still see the ether etfs getting 10-15% of the assets of the btc ETFs (altho James is…

— Eric Balchunas (@EricBalchunas) May 21, 2024

Concurrently, QCP Capital had provided a bullish forecast on Ethereum’s value following the approval of the ETF, expecting Ethereum to rise beyond $6000. This optimism is based on the prospects of institutional funding and increased market accessibility.

Following the approval of the 19b-4 filings, issuers are now focused on obtaining approval for their S-1 registration statements. This step is critical for the ETFs to begin trading. The SEC has already initiated conversations with issuers regarding their S-1 forms, but the timeline for approval remains to be determined.

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