U.S. SEC Rule Changes Lay Groundwork for Final Approval of Spot Ethereum ETFs
The U.S. Securities and Exchange Commission (SEC) has approved plans from the New York Stock Exchange, Cboe, and Nasdaq regarding spot Ethereum ETFs. This move removes a critical barrier to Ethereum spot trading in the U.S., though the SEC has yet to fully approve any spot Ethereum ETFs, as issuer plans still need approval.
Reportedly, the SEC has approved multiple Form 19b-4 applications for spot Ethereum ETFs, including those from BlackRock (BLK), Fidelity, and Grayscale. Although these forms have been approved, ETF issuers need to wait until their S-1 registration statements are effective before they can begin trading. The SEC has only recently started discussions with issuers about their S-1 forms, and the timeline for this process remains uncertain.
Therefore, issuers now need individual regulatory approval, and no final decision deadline has been set.
Analyst James Seyffart stated, "If they work very hard, they might finish within weeks, but historically, this process has often taken more than three months."
Investment firms such as VanEck, ARK Investment Management, BlackRock Inc. (BLK), and Fidelity Investments are all competing for the crucial first-mover advantage in launching a spot Ethereum ETF. Since the SEC approved spot Bitcoin ETFs for trading in January of this year, billions of dollars have flowed into these new Bitcoin ETFs, spurring their interest.
Coinbase’s stock rose 4.1% in after-hours trading on Thursday, while Robinhood’s (HOOD) stock increased by nearly 3%. The cryptocurrency market reacted relatively calmly to the news, with Ethereum trading at approximately $3,819.80 immediately after the announcement.
Some experts believe that the approval of spot Ether ETFs might mirror the case with Bitcoin ETFs. This could be a "buy the rumor, sell the news" event, but it might also trigger a rally in Ether.
What is Ether?
Ether (ETH) is a cryptocurrency and the native digital currency of the Ethereum platform. Ethereum is an open-source blockchain platform that supports smart contracts and decentralized applications (DApps). In summary, Ether is a crucial currency on the Ethereum platform, used to pay for network transactions and computational fees, and it supports the development of smart contracts and decentralized applications.
Cryptocurrency Market Boosted by SEC Approval
Yahoo Finance reports that the SEC's approval will be a milestone for the cryptocurrency market, potentially paving the way for substantial institutional capital inflows.
According to Reuters, recent data indicates that global venture capital investment in cryptocurrency startups increased to $2.4 billion in Q1 2024, suggesting a potential revival of investor interest. Following the approval of spot ETH ETFs, investor interest might escalate, leading to a market rebound.
Ethereum Could Benefit from Bitcoin's Value Growth
Earlier this year, the SEC approved several spot Bitcoin ETFs, leading to a significant rise in Bitcoin prices, attracting billions of dollars in investments and soaring 67% in value. The approval of spot ETH ETFs could similarly cause a surge in the value of digital currencies.
Since early 2024, Ether has risen by approximately 57%. This implies that if the SEC makes a positive ruling, this digital asset might have further upward momentum.
ETF Focus
Below, we highlight several ETFs with substantial exposure to Ether, offering investors an opportunity to enhance their portfolios with cryptocurrency. As the SEC prepares to potentially take a favorable stance, these ETFs provide a way to profit from future market movements.
ProShares Ether Strategy ETF (EETH)
ProShares Ether Strategy ETF employs an active strategy with approximately $88.2 million in assets under management. The fund charges an annual fee of 0.95% and has a dividend yield of 4.67%.
ProShares Ether Strategy ETF is up 57% year-to-date.
VanEck Ethereum Strategy ETF (EFUT)
VanEck Ethereum Strategy ETF uses an active strategy with approximately $31.3 million in assets under management. The fund charges an annual fee of 0.66% and has a dividend yield of 4.30%.
VanEck Ethereum Strategy ETF is up 45% year-to-date.
Bitwise Ethereum Strategy ETF (AETH)
Bitwise Ethereum Strategy ETF follows an active strategy with approximately $12.21 million in assets under management. The fund charges an annual fee of 0.90% and has a dividend yield of 4.72%.
Bitwise Ethereum Strategy ETF is up 53% year-to-date.
