Ethereum ETFs Approved by SEC, Bringing Popular Funds to Second-Largest Cryptocurrency

Issuers received approval for their latest S-1 filings, which means that the funds could begin trading as early as Tuesday.

The U.S. Securities and Exchange Commission (SEC) has given final approval for spot exchange-traded funds (ETFs) that hold ether (ETH), giving Americans access to a second major cryptocurrency via the easy-to-trade vehicles.

The decision caps a years-long process to get ether ETFs approved by the SEC, following the regulator's approval of bitcoin (BTC) ETFs in January. Packaging ether in an ETF wrapper could make them more palatable to conventional investors since the funds can be bought and sold through traditional brokerage accounts.

Since their debut in January, bitcoin ETFs have attracted tens of billions of dollars of investment. Approval for ether ETFs did not seem certain just weeks ago.

But in late May, SEC officials abruptly began engaging with wannabe ETF issuers after a long silence. Then, on May 23, the regulator approved a key filing, opening up a pathway to full approval through the latest decision.

"We've now fully entered the ETF era of crypto," Matt Hougan, chief investment officer at Bitwise, told CoinDesk. "Investors can now access more than 70% of the liquid crypto asset market through low-cost ETPs."

"Being the first to file for an Ethereum ETF back in 2021, we have long believed investors should have access to Ethereum exposure in a vehicle they find accessible and familiar," Kyle DaCruz, head of digital assets at VanEck, told CoinDesk. "If Bitcoin is digital gold, then Ethereum is the open-source App Store and the gateway for exposure to the thousands of applications that will utilize blockchain technology."

The approval and beginning of trading of the spot bitcoin ETFs in January, which became the most successful launch in the history of exchange-traded products in terms of the speed of money rushing into them, pushed the price of the largest cryptocurrency up to new all-time highs after surging more than 58% within just two months.

Some analysts predict that while a spot ETH ETF could move the price of ether up to $6,500, inflows into those funds won't be nearly as high as for their bitcoin-counterparts.

Research firm Steno Research predicts that the newly launched ETFs could see $15 billion to $20 billion worth of inflows in the first year, which is roughly the same that the spot bitcoin ETFs have taken in seven months.

However, a report by the firm noted that ether doesn't have the "first-mover advantage" that bitcoin had and it lacks a strong narrative such as bitcoin's "digital gold" belief among many supporters.

The seven-figure inflows into the Grayscale Ethereum Trust (GETH) over the past seven years could also serve to reduce demand for the new ETFs, the report added.

Steno also predicts that ether ETFs will likely see lower expense ratios (management fees) than bitcoin ETFs, which could range between 0.65% to 0.95%.

"We expect the expense ratios for the Ethereum ETFs to be lower than those for the bitcoin ETFs, reflecting the lower volatility and higher liquidity of ether relative to bitcoin and the likely economies of scale," the report said.

The approval of ether ETFs comes at a time when the SEC is facing criticism for approving the cryptocurrency-linked funds while still not allowing a spot bitcoin ETF to trade.

Steno said in its report that the SEC's approval of ether ETFs could increase pressure on the regulator to approve a spot bitcoin ETF, which would likely attract even more capital into the cryptocurrency markets.

"The SEC's approval of Ethereum ETFs, while still not approving a spot bitcoin ETF, is likely to increase the scrutiny on the SEC and the pressure to approve a spot bitcoin ETF, which would likely attract even more capital into the cryptocurrency markets," the report said.

迄今為止，美國證券交易委員會已批准了四隻比特幣期貨ETF 和三隻與比特幣掛鉤的交易所交易票據（ETN），但尚未批准現貨比特幣ETF，儘管一年多前就收到了申請。

Steno said in its report that the SEC's approval of ether ETFs could increase pressure on the regulator to approve a spot bitcoin ETF, which would likely attract even more capital into the cryptocurrency markets.

"The SEC's approval of Ethereum ETFs, while still not approving a spot bitcoin ETF, is likely to increase the scrutiny on the SEC and the pressure to approve a spot bitcoin ETF, which would likely attract even more capital into the cryptocurrency markets," the report said.

迄今為止，美國證券交易委員會已批准了四隻比特幣期貨ETF 和三隻與比特幣掛鉤的交易所交易票據（ETN），但尚未批准現貨比特幣ETF，儘管一年多前就收到了申請。

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