Breaking: SEC approves spot Ethereum ETFs after shocking U-turn

Source Fxstreet
May 23, 2024 21:31
  • The US SEC approved spot ETH ETF applications on Thursday after initial delays.
  • SEC surprisingly began to engage with issuers on Monday after weeks of silence.
  • Ethereum may set a new all-time high as Bitcoin did after ETF approval.

The US Securities & Exchange Commission (SEC) approved 19b-4s filings of spot ETH ETFs on Thursday after several weeks of silence towards issuers.

SEC approves spot ETH ETF amended filings

The SEC approved 19b-4s filings of spot ETH ETFs on Thursday after asking exchanges to submit amended filings on Monday. The approval comes after weeks of silence from the SEC towards ETF applications.

The SEC would also have to approve S-1s applications — which may take some weeks — before the ETFs officially launch.

After the SEC approved spot Bitcoin ETFs in January, many expected the agency also to greenlight applications for spot ETH ETFs. However, the SEC reportedly refused to engage with issuers, postponing applications on several occasions. Unlike its approach with spot Bitcoin ETFs, where it was in constant contact with issuers, the SEC's silence led many to believe it wouldn't approve spot ETH ETFs. As a result, Bloomberg analysts Eric Balchunas and James Seyffart tagged approval odds of the ETFs at 25%.

In addition, Ethereum infrastructure provider Consensys court filings showed that the SEC was considering declaring ETH as a security after launching investigations into Ethereum-related firms.

However, the SEC surprisingly began engaging with issuers on Monday, asking exchanges to submit amended 19b-4s filings. As a result, Balchunas and Seyffart increased their approval odds to 75%, terming the move as largely political and possibly spurred by US President Joe Biden after Presidential candidate Donald Trump's pro-crypto speech.

What the Ethereum ETF approval mean for investors

Considering Bitcoin's run to a new all-time high and the general market rally following its ETF approval in January, several experts predict spot ETH ETF will have a similar effect. Specifically, many expect DeFi tokens to be among the largest gainers alongside Ethereum in the next couple of weeks.

Matthew Sigel, Head of digital assets at Van Eck, predicts that yield across staking protocols would skyrocket as ETH leaves the ecosystem into these ETFs. However, this could also have security consequences for the broader Ethereum ecosystem. Some analysts have predicted that spot ETH ETFs inflows would be tiny compared to Bitcoin as most investors won't want to miss out on staking rewards. A recent analysis by CCData sheds light on this take:

"Hypothetically, if you had opened a 1000 ETH position on January 1st, 2023 with an ETF provider, instead of holding native Ether, which accrues staking rewards, you would have missed out on gains of over $200,000."

(This is a developing story and will be updated as we get more information.)

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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