SEC greenlights spot Ether ETFs, but Ether price shows little movement

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As a seasoned crypto investor with a keen interest in Ethereum’s price movements and regulatory developments, I find the recent SEC approval of spot Ether ETFs in the United States to be an intriguing development. Despite the green light given for these funds to launch, Ethereum’s price has remained relatively stable, trading around $3,701 with a 24-hour volume of $47.5 billion.

As an analyst, I’ve observed that Ethereum‘s price has remained relatively stable notwithstanding the SEC’s recent approval of spot Ether ETFs to be launched more swiftly in the US markets.

Prior to the SEC’s groundbreaking decision, Ether experienced a decline of 3.4%. However, it recuperated by approximately 5% following the approval. Currently, Ether is priced at $3,701, with a trading volume of $47.5 billion over the past 24 hours, based on data from CoinMarketCap.

SEC greenlights spot Ether ETFs, but Ether price shows little movement

On May 23rd, the SEC granted approval for 19b-4 applications from notable financial institutions including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. This significant decision enables these firms to introduce and facilitate trading of spot Ether Exchange Traded Funds (ETFs) on their respective platforms.

Hashdex was the only ETF issuer that did not receive regulatory approval on the day.

Yet, the process isn’t complete for ETF issuers. They need to obtain the SEC’s endorsement for their S-1 applications before spot Ethereum ETFs can commence legitimate trading. This could consume several weeks or even months.

As a crypto investor, I’ve learned that the SEC’s review process for S-1 registrations is thorough and can take anywhere from several weeks to a few months. During this time, they meticulously examine the filings to ensure compliance with regulatory standards. In the least favorable scenario, we can expect a decision by the end of summer.

To clarify, receiving 19b-4 approval does not automatically signify that they will commence trading imminently. This is merely an initial step in the process. The Securities and Exchange Commission (SEC) still needs to approve the S-1 documents which could take several weeks or even longer. We anticipate receiving more information within a week’s time, but it might take longer than expected.

— James Seyffart (@JSeyff) May 23, 2024

As an analyst, I was taken aback when the securities regulator issued a directive on May 20th urging accelerated 19b-4 filings. The surprise deepened with the omission of staking in several applications, leading to widespread speculation regarding the SEC’s underlying reasons for this sudden push.

Certain industry voices contend that political influences may have influenced the decision. Before gaining approval, a coalition of legislators from both major parties advocated for the SEC’s endorsement of these Ethereum ETFs. They maintained that since Bitcoin ETFs had been authorized, the same principle should apply to Ethereum.

Does SEC’s ETF nod mean ETH is no longer a security?

Industry insiders view the SEC’s approval of Ethereum ETFs as a quiet yet impactful signal. This endorsement implies that Ether may not be classified as a security in the SEC’s perspective.

In simpler terms, James Seyffart, an ETF analyst at Bloomberg, stated on the Bankless podcast that these trust shares based on commodities are now approved by the SEC. This implies that they will not consider Ether as a security and will not take any regulatory action against it.

According to digital asset attorney Justin Browder, if Ether Exchange-Traded Funds (ETFs) receive Securities and Exchange Commission (SEC) approval, then the controversy will be resolved: Ether will no longer be considered a security.

Nonetheless, other market players like Verbitskii believe the SEC might still target ETH.

“According to Verbitskii, an Ethereum ETF’s approval by the SEC doesn’t signify that the SEC considers Ethereum as no longer being a security. Instead, it implies that the ETF adheres to regulatory requirements for trading and investor safeguards.”

Finance attorney Scott Johnsson noted that the Securities and Exchange Commission (SEC) failed to explicitly acknowledge Ether’s non-security status in their approval order, instead choosing to avoid addressing the matter altogether.

As a crypto investor, I’m eagerly waiting for the upcoming official statement from the SEC and some of its Commissioners. Their clarification on this matter is expected soon and will likely bring more clarity to our investment decisions.

Four and a half months ago, the SEC gave its approval to Bitcoin spot ETFs for the first time, on January 10. Now, Ether spot ETFs have also received the green light from the SEC, signaling potential industry expansion. Experts in the field are optimistic about future developments.

Sumit Gupta, the co-founder of CoinDCX, pointed out that Bitcoin’s value surged noticeably following the start of trading for its ETF in January. This observation implies that the approval and subsequent trading of an Ether ETF could potentially spark a price increase of up to 60%.

As an analyst, I’ve observed a significant surge in Bitcoin’s price following the launch of the Bitcoin ETF on January 11, 2021. In just two weeks, Bitcoin climbed from $42,000 to over $73,000. The data reveals that these US spot Bitcoin ETFs have absorbed approximately 548,556 BTC, equivalent to around $36 billion, within a span of four months. Moreover, there’s an expectation that the introduction of a spot Ethereum (ETH) ETF could potentially trigger a rally of up to 60%.

As a crypto investor, I can tell you that Lennix Lai, the chief commercial officer at OKX, expressed his belief in significant institutional interest for a spot Ethereum ETF. He envisioned a potential inflow of passive capital from institutional investors totalling between $300-500 million during the first week alone.

This development is of great importance, as I pointed out, and Ethereum’s implementation as a Proof-of-Stake (PoS) platform may generate substantial institutional investment.

As an analyst, I’ve observed that Ethereum provides a wealth of functionalities beyond what’s commonly known. It serves as the primary platform for interacting with Decentralized Finance (DeFi) solutions, including staking. Consequently, the potential approval of an ETH Exchange-Traded Fund (ETF) could draw in additional users, encouraging them to explore the realm of Web3 products.

Some experts issue a note of caution, warning that the price of Ether may not jump significantly right away following the approval.

According to Asal Alizade, the co-founder of Blocklogica, a significant market shift transpired following the approval of Bitcoin Exchange-Traded Funds (ETFs), enabling larger inflows of capital from traditional financial institutions. Consequently, while the approval of an Ether ETF may not trigger a substantial market upheaval, it could potentially shape the trajectory of Ethereum Virtual Machine (EVM) assets and generate minor trends in the crypto sector.

Benjamin Charbit, CEO of Darewise Entertainment, commented that the approval of the ETF was probably anticipated beforehand, much like the Bitcoin ETF approval earlier in the year. In his perspective, this development is not a negative indication but rather a sign of maturity akin to what has long been observed in traditional finance (TradFi).

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2024-05-24 14:18