Imminent Approval of Ether Spot ETF: Setting a New Course in the Cryptocurrency Market
Summary:
The financial industry is not just celebrating the introduction of a Bitcoin spot ETF, but is also eagerly preparing for the imminent approval of an Ether (ETH) spot ETF by the United States Securities and Exchange Commission (SEC). After years of unjustified denials based on bias against Bitcoin, the approval of cryptocurrency products is becoming smoother. The concern now shifts toward factors like market size, liquidity, and the scaling concerns of Ethereum, as the approval of the ETH spot ETF could pave the way for the approval of various other cryptocurrency-supported Exchange-Traded Products (ETPs).
The finance industry has recently welcomed the Bitcoin spot ETF, a milestone that seemed unlikely to witness during one’s professional journey. The focus now has swiftly moved to Ether (ETH) spot ETF's potential approval. However, it is no longer a matter of 'if' but rather 'when' the approval of the ETH spot ETF will happen. The United States Securities and Exchange Commission, which for over a decade was able to produce vague denials about the Bitcoin equivalent, can no longer disregard the obvious commodity ETP filing.
This was reflected by Commissioner Hester Peirce, who expressed strong criticism regarding the SEC's conduct in relation to this approval, especially as the applications for such commodities were rejected based on an unjust bias against Bitcoin (BTC). This unjust bias ended finally due to the lawsuit brought by Greyscale.
As a result, this has not only resulted in a decline in faith towards the SEC, but it also resulted in an unexpected hype around these cryptocurrency products. An example of this is the $1 billion in assets currently part of BlackRock's Bitcoin spot ETF.
At present, seven ETH spot ETF applications are waiting on the SEC's table. The first to farewell its application process is VanEck, which is expected to conclude by May 23, 2024, followed by BlackRock in August of the same year.
Given its past actions regarding VanEck's applications, the securities regulatory body would be hard-pressed to find a solid reason to deny an application, as this may trigger a domino effect for the other awaiting applications. This creates an anticipation of an approval in May.
The ripple effect of this will not only impact the ETH product but sets precedence for the approval of all sorts of cryptocurrency-supported or associated ETP – from spot products to more intricate instruments like structured products, all related to digital assets.
However, a potential snag in the road to spot ETH approval could be liquidity. Similar to the market size and scale concern for Bitcoin with its spot product, Ethereum may face a larger challenge due to its shift towards proof-of-stake, causing a limit on ETH availability.
The question of ETH being a security becomes irrelevant as it becomes a security once it is an ETF. Moreover, the prolonged approval of a Bitcoin ETF primarily had political motivations.
The SEC was hesitant to make a commitment until the asset validation process was completed. The acceptance of the Bitcoin spot ETF embodies more than just recognition, but a seat in the financial instituion. Now, with an expected swift approval of a spot ETH ETF, the finance industry should brace for a complete institutional takeover of the cryptocurrency sector.
Note: The views and opinions in this article are exclusively from the author. They do not necessarily signify or mirror the views and perspectives of Cointelegraph. The purpose of this article is to provide general information only and is not meant to be or should be assumed as legal or investment counsel.
Published At
1/23/2024 9:58:04 PM
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