The Securities and Exchange Commission has approved the listing of exchange-traded funds based on the spot price of ether, the second-largest cryptocurrency. This approval comes as a surprise to many in the industry, as SEC Chairman Gary Gensler had previously suggested that he believed ether was a security. The decision will allow eight funds from Blackrock, Fidelity, and Grayscale to begin trading, although there is no definitive timeline for when this will occur.
These funds will join the 11 bitcoin-based ETFs that were approved in January, which currently hold approximately $58 billion in assets. Together, these funds will provide investors with access to tokens that represent a large portion of the cryptocurrency market. Ether saw a 22% increase in price leading up to the SEC announcement, reaching $3,762. The approval of these ETFs has been hailed as a significant win for investors and a step towards broader access to digital assets.
While the approval of ether-based ETFs is seen as a positive development, it may not receive the same level of investor interest as bitcoin ETFs did. The Grayscale Ethereum Trust holds $11.1 billion in assets, but investors may withdraw their funds due to its high expense ratio. Additionally, ether may be a more challenging sell to new investors compared to bitcoin. Still, the broader pro-crypto momentum in Washington, including the recent House bill on financial innovation and technology for digital assets, indicates a softening stance towards cryptocurrencies.
The SEC’s change of heart regarding ether ETFs reflects a broader shift in attitudes towards cryptocurrency regulation. The House bill, currently awaiting Senate approval and President Biden’s endorsement, would determine how digital assets are regulated and split oversight duties between the SEC and the Commodity Futures Trading Commission based on whether a cryptocurrency is classified as a security or a commodity. This approval of ether ETFs hints at a more favorable stance towards crypto assets within regulatory bodies.
The decision on Thursday gives NYSE Arca permission for various ether-based trusts and ETFs, including those from Grayscale, Bitwise, iShares, VanEck, ARK 21Shares, Invesco, Fidelity, and Franklin. This marks a significant step towards broader access to cryptocurrency investments for mainstream investors. The industry is hopeful that this approval signals a growing acceptance of digital assets within traditional financial markets, paving the way for further innovation and growth in the sector.
