In a surprising move, the Securities and Exchange Commission has granted permission to three major financial markets to list exchange-traded funds based on the spot price of ether. This decision marks a significant step in creating an investor-friendly way to own the second-largest cryptocurrency. Despite earlier statements suggesting that ether might be considered a security, the SEC’s approval will allow eight funds to begin trading, pending registration approval from Blackrock, Fidelity, and Grayscale applicants.
The approval of these ether-based ETFs comes on the heels of 11 bitcoin-based ETFs that were approved in January and currently hold about $58 billion in assets. Together, these funds will give stock-market access to tokens that represent a large portion of the overall cryptocurrency market. With speculation growing, ether has seen a 22% increase in value since Monday, trading at around $3,762 following the SEC’s announcement.
The approval of these ETFs is seen as a significant win for investors, with the potential to increase access to digital assets for a wider range of individuals. While some anticipate that ether ETFs may not see the same level of adoption as bitcoin ETFs, due in part to the differences in market size and investor familiarity, the decision by the SEC signals a shifting attitude towards cryptocurrencies. This change of heart aligns with broader pro-crypto momentum in Washington, as evidenced by recent legislative actions aimed at regulating digital assets.
The House of Representatives recently passed the Financial Innovation and Technology for the 21st Century Act, which seeks to establish a regulatory framework for digital assets. The bill, supported by 71 Democrats, would divide oversight responsibilities between the SEC and the Commodity Futures Trading Commission based on whether a cryptocurrency is considered a security or a commodity. This legislation, coupled with the approval of ether ETFs, suggests a softening of opposition to cryptocurrencies within the U.S. government.
The decision on Thursday gives NYSE Arca permission to list the Grayscale Ethereum Trust and Bitwise Ethereum ETF, Nasdaq to list the iShares Ethereum Trust, and Cboe BZX Exchange to list the VanEck Ethereum Trust, ARK 21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF. This development marks a significant milestone in the integration of cryptocurrencies into traditional financial markets, indicating a growing acceptance of digital assets among mainstream investors.
Despite potential challenges, such as concerns about the Grayscale Ethereum Trust’s high expense ratio and the need for increased investor education on ether, the approval of these ETFs signifies a major shift in the perception of cryptocurrencies as viable investment options. With ongoing legislative efforts and regulatory changes in Washington, the path forward for digital assets appears to be increasingly clear, paving the way for further innovation and growth in the crypto space.
