The latest S-1 filings submitted by issuers have been successfully approved, and the funds are expected to start trading as early as Tuesday. U.S. regulators have finally approved spot exchange-traded funds (ETFs) that hold Ethereum ETH, allowing U.S. investors to invest in this important cryptocurrency through this convenient trading tool.
The decision marks the end of the SEC's multi-year process to approve an Ethereum ETF, following the regulator's approval of a Bitcoin BTC ETF in January. Presenting Ethereum in the form of an ETF could increase its appeal among traditional investors, who can trade it through traditional brokerage accounts. Bitcoin ETFs have attracted billions of dollars in investment since they were first launched in January. A few weeks ago, the prospects for ETF approval were unclear.
However, in late May, SEC officials suddenly began talking to institutions intending to issue ETFs after a long period of silence. Then on May 23, the regulator approved a key document, paving the way for full approval of the decision.
"We have now officially entered the era of cryptocurrency ETFs," declared Matt Hougan, chief investment officer of Bitwise. "Investors can now access more than 70% of the global liquid crypto asset market through low-cost ETPs." "As the first company to apply for an Ethereum ETF in 2021, we have always believed that investors should be able to access Ethereum in a way that they find convenient and familiar."
Kyle DaCruz, head of digital assets at VanEck, said, "If Bitcoin is digital gold, Ethereum can be thought of as an open source app store, a gateway to thousands of applications that leverage blockchain technology." Further reading: Two research firms predict that market demand for Ethereum ETFs may be low
The impact on Ethereum prices
In January of this year, the spot Bitcoin ETF was approved and began trading, becoming the most successful exchange-traded product in history in terms of the speed of capital inflows, which pushed the price of Bitcoin to soar by more than 58% in just two months, setting a record high.
While some analysts predict that spot ETH ETFs could drive the price of Ether to $6,500, these funds may not see as much inflow as their Bitcoin-focused counterparts.
Research firm Steno Research expects that the newly launched ETF could attract $15 billion to $20 billion in inflows in the first year, which is roughly comparable to the inflows of spot Bitcoin ETFs in just seven months. The report points out that Ethereum lacks the "first-mover advantage" that Bitcoin has, and it does not have a strong narrative such as the belief in "digital gold" like Bitcoin in the minds of many supporters.
