The US SEC – Securities and Exchange Commission made a groundbreaking decision on Thursday by approving applications from Nasdaq, CBOE, and NYSE to list exchange-traded funds (ETFs) tied to the price of ether. This development marks a significant step forward for the cryptocurrency industry, potentially allowing these products to begin trading later this year.
A Surprising Victory for Cryptocurrency Firms
Until recently, the general expectation within the industry was that the US SEC would reject these filings. However, Thursday’s approval represents a surprising victory for the firms involved and the broader cryptocurrency sector. ETF issuers still need final approval before launching their products, but this initial green light is a crucial milestone.
Nine issuers, including major players like VanEck, ARK Investments/21Shares, and BlackRock, are now closer to launching ETFs tied to ether, the second-largest cryptocurrency by market capitalization. This follows the SEC’s approval of bitcoin ETFs in January, which was a watershed moment for the industry.
“This is an exciting moment for the industry at large,” said Andrew Jacobson, vice president and head of legal at 21Shares. He described the approval as “a significant step” towards getting these products trading.
The US SEC’s Unpredictable Timeline
The US SEC’s decision came as a surprise to many market participants. Thursday was the deadline for the SEC to decide on VanEck’s filing, and the lack of prior engagement from the SEC had led to expectations of a rejection. In a surprising move, SEC officials requested last-minute adjustments to the filings on Monday, sending the industry into a frenzy to complete weeks of work in just days.
“The introduction of spot bitcoin ETFs has already demonstrated significant benefits for the digital assets and ETF space, and we believe that spot ether ETFs will similarly provide safeguards for U.S. investors,” said Rob Marrocco, global head of ETP listings at Cboe Global Markets.
Nasdaq and NYSE have declined to comment on the matter. SEC Chair Gary Gensler, known for his skeptical stance on cryptocurrencies, also declined to comment when questioned by reporters at an industry event earlier on Thursday.
While the SEC has approved the rule change required to list these new products, issuers still need to secure approval for their ETF registration statements. These statements detail investor disclosures and must be approved before trading can commence. Unlike the exchange filings, there is no set timeline for the SEC to decide on these statements. Industry insiders speculate that while many issuers are prepared to launch, the SEC’s corporate finance division may request changes and updates in the coming days and weeks.
The SEC had previously rejected spot bitcoin ETFs for over a decade due to concerns about market manipulation. However, the agency was compelled to approve them after Grayscale Investments won a court challenge last year. Sui Chung, CEO of CF Benchmarks, the index provider for several bitcoin and ether ETFs, noted that ether is more complex than bitcoin, which could extend the review process. However, given the established template from bitcoin ETFs, he suggested that the SEC’s ability to delay is limited.
Impact on the Cryptocurrency Industry
The approval of spot ether ETFs is another significant boost for the cryptocurrency industry’s push into mainstream finance. This week, the UK regulator also approved listed cryptocurrency products, and the U.S. House of Representatives passed a landmark bill aiming to provide regulatory clarity for cryptocurrencies. Although the bill still needs to pass the Senate, its broad bipartisan support represents a major endorsement for the industry.
With over $30 billion already invested in crypto ETFs by a diverse array of investors, including hedge funds, wealth advisors, and retail investors, Thursday’s decision underscores the growing acceptance and integration of digital assets into mainstream financial markets.
Conclusion
The US SEC’s approval of spot ether ETFs marks a pivotal moment for the cryptocurrency industry, opening the door for broader adoption and integration into traditional finance. As the industry navigates the final steps towards launching these products, this development signifies a new era of investment opportunities and regulatory acceptance for digital assets.
