SEC Approves Ethereum ETF!

The U.S. Securities and Exchange Commission (SEC) officially approved the first spot Ethereum ETF on the evening of Thursday, May 23, 2024. This decision marks a significant step in the move towards wider adoption of cryptocurrencies in traditional financial markets.

The SEC’s decision to approve the Ethereum ETF comes less than 5 months after the Commission approved several spot ETFs for the most popular and largest cryptocurrency, Bitcoin, in the first half of January. Spot ETFs on Bitcoin have proven to be a great success since their launch, with these funds currently having $57 billion in capital under management and cumulative trading volume reaching as high as $270 billion, according to analytics platform IntoTheBlock.

Yesterday was the last day by which the SEC had to rule on an application from VanEck regarding the launch of the VanEck Ethereum ETF. In this case, the SEC could not delay its decision any longer and had to make a final decision on whether to approve or deny the request. The SEC concurrently approved 19b-4 applications for Ethereum ETFs from VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy and Bitwise.

It should be noted that even though the 19b-4 forms have been approved, applicants for spot ETH ETFs still need the SEC to also approve the S-1 forms that will allow the Ethereum funds to start trading. And although the SEC has already begun communicating with applicants on this matter as well, some analysts have warned that approval of the S-1 forms, as well as the commencement of trading of Ethereum ETFs, may still take several more weeks.

The difference between the approval of Bitcoin and Ethereum ETFs is that in the case of Bitcoin ETFs, the S-1 forms were prepared before the approval of the 19b-4 forms. This resulted in Forms S-1 becoming effective within hours, allowing Bitcoin ETFs to begin trading the very next day.

The Ethereum ETF approval comes as a surprise to some analysts, even given that the SEC had virtually no communication with applicants until earlier this week. The turnaround came on Monday when the SEC urged applicants to promptly amend and file their applications with the SEC. Some analysts believe that a political decision ahead of the US presidential election in November may be behind this last-minute change of heart.

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