SEC Approves Ethereum ETFs, Opening Door to Mainstream Crypto Investments
The U.S. Securities and Exchange Commission (SEC) has granted final approval for spot exchange-traded funds (ETFs) that hold Ethereum's ether (ETH), marking a significant milestone in the cryptocurrency industry. This decision comes after years of regulatory deliberation and follows the SEC's approval of bitcoin ETFs in January 2024. The approval allows American investors to gain exposure to the second-largest cryptocurrency through conventional investment vehicles.
The introduction of ether ETFs is expected to make cryptocurrency investments more accessible to traditional investors. These funds can be bought and sold through standard brokerage accounts, potentially attracting a broader range of investors to the crypto market. Since their launch in January, bitcoin ETFs have seen substantial inflows, attracting tens of billions of dollars in investments.
The path to approval for ether ETFs was not always clear. As recently as a few weeks ago, the outcome remained uncertain. However, in late May, SEC officials unexpectedly began engaging with prospective ETF issuers after a prolonged period of silence. On May 23, the regulator approved a key filing, paving the way for full approval.
Industry experts have welcomed the SEC's decision. Matt Hougan, Chief Investment Officer at Bitwise, stated, "We've now fully entered the ETF era of crypto. Investors can now access more than 70% of the liquid crypto asset market through low-cost ETPs." Kyle DaCruz, Head of Digital Assets at VanEck, emphasized the importance of providing investors with accessible exposure to Ethereum.
The approval of spot bitcoin ETFs in January 2024 led to a significant surge in Bitcoin's price, with the cryptocurrency reaching new all-time highs after rising more than 58% within two months. While some analysts predict that the introduction of spot ETH ETFs could push the price of ether up to $6,500, others suggest that inflows into these funds may not be as substantial as those seen with bitcoin ETFs.
Research firm Steno Research estimates that the newly launched Ethereum ETFs could attract $15 billion to $20 billion worth of inflows in their first year. This projection is roughly equivalent to the amount that spot bitcoin ETFs have taken in over seven months. The firm notes that Ethereum lacks the "first-mover advantage" that bitcoin had and does not have as strong a narrative as bitcoin's "digital gold" status among supporters.
