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SEC Approves Ether ETF: Landmark Decision for Cryptocurrency Regulation

The SEC's approval of spot Ether ETFs is a significant step towards legitimizing cryptocurrency investments and providing more regulatory clarity.

The SEC's approval of spot Ether ETFs is a significant step towards legitimizing cryptocurrency investments and providing more regulatory clarity.
Credit: Foretoken Media 2024

WASHINGTON – In a monumental decision, the United States Securities and Exchange Commission (SEC) has approved spot Ether (ETH) exchange-traded funds (ETFs) in the U.S. This approval marks the second significant regulatory green light this year, following the approval of spot Bitcoin ETFs in January.


SEC Approves Spot Ether ETFs


On May 23, the SEC approved the 19b-4 filings from major financial entities including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. These approvals allow spot Ether exchange-traded funds to be listed and traded on their respective exchanges, a significant move despite ongoing speculation about Ether potentially being classified as a security by the SEC.


While the 19b-4s have been approved, ETF issuers are still awaiting the SEC's sign-off on their respective S-1 registration statements to officially begin trading. Analysts suggest that this final approval could take days, weeks, or even months. The SEC had reportedly instructed applicants to accelerate their 19b-4 filings on May 20, with the most notable amendment being the removal of staking.


The SEC's approval of spot Ether ETFs comes shortly after the United States House of Representatives voted in favor of the Financial Innovation and Technology for the 21st Century Act. This legislation aims to provide clearer regulatory guidelines for the cryptocurrency industry by delineating the roles of the SEC and the Commodity Futures Trading Commission (CFTC). However, the act still needs to be passed by the Senate and signed into law.


Market Reaction


Following the historic approval, Ethereum experienced a 4% drop, with its price falling from $3,840 to $3,701, according to CoinGecko. This decline continued over the next 24 hours, reflecting a typical "buy the rumor, sell the news" market response. Initially, rumors of the ETF approval had spiked Ethereum's price by 9%.


Bitcoin exhibited similar behavior after the SEC approved spot Bitcoin ETFs in January. BTC dropped 6% the morning after the approval and continued to decline by 12% over the following week. It took a month of volatility for Bitcoin to recover and start a steady climb to a new all-time high.


British multinational bank Standard Chartered predicts that the approval of ETH ETFs will positively impact both ETH and BTC prices. Geoff Kendrick, a digital assets researcher at Standard Chartered, stated, "An ETH ETF approval will further legitimize the sector and therefore be BTC-positive as well." Kendrick expects a fresh all-time high in BTC soon, although Bitcoin is currently down 3.5% over the past 24 hours.

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