Author: Nianqing, ChainCatcher
At around 5 a.m. Beijing time on May 24, the U.S. Securities and Exchange Commission approved the 19b-4 forms of eight spot Ethereum ETFs. The eight issuers were Grayscale, Bitwise, iShares, VanEck, ARK & 21Shares, Invesco & Galaxy, Fidelity, and Franklin.
Everyone was waiting for this historic moment, and the SEC's official website crashed several times.
As previously reported , on Tuesday, the US SEC asked exchanges to speed up the update of 19b-4 applications. In the following two days, eight exchanges except Hashdex submitted the final revised version of 19b-4 forms before the deadline. In addition, the S-1 document (i.e. the prospectus document of the potential issuer) will be approved after 19b-4, at which time the Ethereum spot ETFs can be prepared for listing.
In addition, the size of the Ethereum ETF is expected to be smaller than the Bitcoin ETF, at least initially. For example, Grayscale Ethereum Trust currently has about $11 billion in assets, which is much smaller than the Bitcoin fund before the company converted.
The first batch of approved Ethereum spot ETFs have no collateral income
It is worth mentioning that although the Ethereum ETF was approved, the key to its approval was the abandonment of the staking function.
Recently, issuers have submitted revised S-1A documents to the SEC to delete the pledge function. Among them, VanEck submitted a revised S-1A document to the SEC in February this year. This document is the first amendment to the S-1 registration statement submitted by many issuers that does not contain a pledge clause.
Unlike Bitcoin, Ethereum's proof-of-stake consensus protocol allows users to stake their assets on the network, and the current staking yield is about 3%. Therefore, if there is a staking function, investors can stake ETH in the ETF to obtain passive income and bring potential capital appreciation to their assets, which is also the original Ethereum spot ETF compared to the Bitcoin spot ETF.
But staking has always been a sensitive issue for Ethereum. Previously, the U.S. SEC alleged in a lawsuit against Coinbase and Kraken that staking-as-a-service products were unregistered securities and that they violated securities laws by providing staking services through their platforms.
Many crypto market participants believe that the key changes made by the issuer to the spot Ethereum ETF application are good for the Ethereum blockchain itself , but not for the ETF product itself. Some market participants believe that if the ETF cannot stake its tokens, then the spot ETF will be less attractive than directly purchasing stakeable Ethereum.
Bitcoin spot ETF issuers CoinShares and Valkyrie have stated that they will not apply for a spot Ethereum ETF, mainly because the spot Ethereum ETF cannot participate in staking.
In contrast, the Hong Kong Securities and Futures Commission revealed to Bloomberg yesterday that it is considering allowing staking of spot Ethereum ETFs in the region, and has negotiated with Hong Kong's cryptocurrency ETF companies to provide staking services through licensed platforms. If approved, issuers will jointly develop plans for staking Ethereum.
What will be the impact on the market outlook?
On the eve of the approval of the Ethereum spot ETF, many institutions and analysts made relevant predictions for the subsequent market.
KOL Ni Da @Phyrex_Ni predicted that after the ETF is passed, ETH will "definitely have no problem" breaking through its previous high of $4,800, but it is not certain whether it will reach that level immediately after it is passed.
Geoff Kendrick, head of foreign exchange research and digital asset research at Standard Chartered Bank, said that if the Ethereum spot ETF is approved, it is expected that there will be an inflow of 2.39 million to 9.15 million ETH in the first 12 months, equivalent to about 15 billion to 45 billion US dollars in US dollars. In addition, he also predicted that ETH will reach $8,000 by the end of 2024.
Bernstein analysts Gautam Chhugani and Mahika Sapra predict that the approval of a spot Ethereum ETF will drive Ethereum prices up 75% to $6,600. They pointed out that the SEC approved a similar Bitcoin product in January, spurring a 75% increase in Bitcoin prices in the following weeks, and expect similar changes in ETH's price trend.
QCP Capital predicts that if the spot ETF is approved, Ethereum prices will be closer to the short-term target of $4,000 and may reach $5,000 later this year.
