It marks the second major institutional crypto related product in the United States. The SEC approved eight Ethereum Exchange Traded Funds late on Thursday afternoon. Grayscale, Fidelity and Blackrock are among the leaders of institutional asset managers now offering spot exchange traded funds to their clients. Their S-1 forms still need approval before live trading can begin.
Earlier in the week, the SEC asked for 19b-4 filing amendments.
The same happened to the Bitcoin ETFs days before their approval. The SEC asked Ethereum ETF applicants to update their 19b-4 filings in anticipation of approval, a step that wasn’t expected, and wasn’t priced in. Analysts raised their expectations of success from 25% to 75% — and ETH jumped ~25% the same day. It marks a huge shift from the SEC, and suggests that they are receiving serious pressure from regulators.
Ethereum is already in a deflationary period, with more ETH being burned than minted. Many analysts expect an increase in price over the long term with institutional money drying up floating supply among exchanges and OTC desks.
Precedence is being set for other major crypto assets.
Bitcoin and Ethereum ETFs now set precedence for further institutional products, and the rumor on wall street is that Solana is next. More importantly, however, is how these assets are classified. For many years, the SEC has been in legal battles with private companies regarding the sale of “securities” claiming that companies are selling “unregistered financial instruments” to retail consumers. The crypto industry fired back arguing securities laws do not apply, and that they are more appropriately categorized as commodities.
However the argument or legislation develops for here, legal antecedence is being established that will help the fight for stronger regulation and clarity for operating compliantly. The SEC will have a much harder time fighting these cases on the back of taxpayer dollars.
Important trends to watch moving forward.
Eight asset managers are preparing their ETFs for live trading on Nasdaq, NYSE Arca, and Cboe BZX Exchange: Grayscale, Fidelity, Franklin, VanEck, Bitwise, ARK Invest & 21Shares, Invesco & Galaxy, and BlackRock’s iShares. Here are the key points to monitor as we move ahead over the weeks and months to come:
- ETH price could vary early among trading, as traders enter and exit new positions.
- BTC flows could change if there is now competition with ETH products.
- ETH is a proof-of-stake blockchain, and the ETFs are not planning on offering staking rewards. Monitor closely how these assets are stored, if they are staked, and what asset managers do with their rewards.
One in five Americans hold digital assets. Crypto will be a talking point of political election cycles, globally.
Alex Cavallero — COO Kii Global
