In under six months since approving spot bitcoin ETF trading in US markets, the SEC has now cleared key regulatory filings, potentially paving the way for Ethereum ETF trading later this year.
Specifically, the SEC has approved the 19b-4 applications from three exchanges, NYSE Arca, Nasdaq, and Cboe BZX Funds, to trade eight Ethereum ETFs, including BlackRock’s iShares Ethereum Trust, the VanEck Ethereum Trust, the ARK 21Shares Ethereum ETF, the Fidelity Ethereum Fund, and Franklin Templeton’s Franklin Ethereum ETF.
In its ruling, the SEC said the proposals are consistent with its rules to “prevent fraudulent and manipulative acts and practices” and to protect investors and public interest in general.
Earlier this week, numerous media outlets reported that issuers were requested to update their 19b-4 filings before the SEC’s deadline to approve or deny one of the issuers, fuelling speculation that approval might be imminent.
“The SEC’s approval of spot Ethereum ETFs is another significant milestone for cryptocurrency investing, reflecting growing accessibility and adoption of these digital assets in the US and worldwide,” said Global X Australia CEO Evan Metcalf.
He anticipates that sentiment towards Ethereum will mirror bitcoin’s trajectory and remain on a positive course, especially considering that bitcoin prices surged to over $73,000 by mid-March following the SEC’s approval of spot bitcoin ETFs in January.
“Here in Australia, we have seen more local investor interest in exposure to cryptocurrency – in fact, EBTC subsequently passed more than $100 million in AUM,” Metcalf added.
Previously, Global X Australia observed the US is “actually behind the eight ball” when it came to Ethereum ETFs, given such offerings were launched in Europe in 2017 and in Canada in 2021.
In 2022, Ethereum ETFs were made available in Australia with the Global X 21Shares Ethereum ETF (Cboe: EETH), listed alongside the Global X 21Shares Bitcoin ETF (Cboe: EBTC).
Since its launch, EETH has garnered $22.6 million in investor funds.
Cboe Australia president Emma Quinn also believes the SEC approval is a “natural next step”, given investors have been increasingly seeking access to cryptocurrencies in their portfolios.
BTC Markets chief executive Caroline Bowler said the SEC’s decision will enhance investor awareness of this asset and its “remarkable role” within the blockchain ecosystem. She believes ETFs will be able to offer a tailor-made vehicle for investors to gain crypto exposure and will bolster crypto’s profile towards the mainstream.
“There are ramifications for traditional financial services as the dynamics of crypto will change their structures forever. Equally, mainstream impacts will mature crypto at a pace, particularly in the areas of compliance and client protection. Each will improve the other,” she said.
“Cryptocurrency and the blockchain economy are bigger than any one person or organisation. Its collective push towards innovating our world creates inevitable outcomes. The US ETP announcements are just one step towards that new world.”
Ben Rose, general manager for Australia and New Zealand at Binance, agreed that the SEC approval bolsters the legitimacy of Ethereum while enhancing “the status, accessibility and growth potential of the wider digital asset ecosystem”.
He observed that the decision reflects growing demand from institutional investors that extends beyond just bitcoin.
“Ethereum is the second-largest cryptocurrency by market cap. Following significant investment in bitcoin ETFs earlier this year, ETH has caught the eye of institutional investors in the US as they seek further investment opportunities in crypto,” he said.
Magnet Capital’s co-founder and director, Egor Sidelska, additionally noted that the SEC’s second approval of a cryptocurrency this year will positively impact market validation.
He cautioned that although Ethereum ETF listings have been approved, the next step of S-1 filings has not yet occurred, raising doubts about the realistic timeline for these ETFs to commence trading.
“We are unsure of when this could happen, it could be days or weeks,” he told InvestorDaily.
Sidelska noted that the SEC’s action signifies a shift in sentiment, with even staunch critics of crypto recognising its viable place within the investment and economic landscape.
Australia getting left behind
Given the strong sentiment around Ethereum and off the back of what has been witnessed with bitcoin prices, Magnet Capital forecasts the SEC approval to boost Ethereum prices over US$7,000 by the end of the year.
Sidelska warns that Australia can no longer afford to overlook crypto and is currently “being left behind”.
“While the tide is shifting in the US both at an institutional, government and regulatory level, Australia is still slow off the mark. Australia has not even approved an ETF on the ASX and hasn’t published any industry standards,” he explained.
“It’s clear from the actions this week that there will be a much more regulatory friendly outlook in the US moving forward, giving comfort and certainty to the longevity of the asset class – but where to for Australia?”
Binance’s Rose also believes it is “imperative” for Australia to take note of regulatory changes.
“With interest fuelling growing demand for crypto and digital assets all around the world, it’s imperative that we maintain the momentum on a regulatory framework here in Australia to protect consumers and drive innovation across the sector,” he said.
