Markets
SEC Approves Ethereum ETFs, Enhancing Crypto Market
The US Securities and Exchange Commission (SEC) has approved a rule change that allows spot equity ETFs to trade in the United States, including those based on Ethereum. This decision caused modest increases in the prices of Ethereum and Bitcoin, and significant gains in cryptocurrency stocks.
The SEC has authorized Rule 19b-4 forms for eight ETF applications from major companies such as BlackRock, Fidelity, Grayscale, ARK Invest, VanEck, Invesco Galaxy and Franklin Templeton. However, these ETFs still require approval of their S-1 registration statements before they can officially debut.
There is no specified timeline for when these forms will be accepted or when trading will begin. The approval of spot Bitcoin ETFs, which began trading on US exchanges in January, set a precedent for this decision. Ethereum, the second-largest cryptocurrency, operates on a proof-of-stake consensus mechanism.
Matthew Sigel, head of digital asset research at VanEck, praised the decision, stating that Ethereum is a decentralized commodity and not a security. “We hope the improving political landscape leads to more wins for investors and digital asset developers,” he commented on social media platform X.
Upon final approval, the VanEck spot Ethereum ETF will begin trading on the CBOE exchange.
Implications for the crypto industry
Sergey Nazarov, co-founder of Chainlink, highlighted the importance of the SEC approval, describing it as an important milestone for the crypto industry. “The approval of the Ethereum ETF is a second big step for the crypto industry,” stated Nazarov. Chainlink, which connects blockchains to real-world data, supports the view that capital markets are increasingly involved in the crypto space.
Nazarov emphasized the potential growth of smart contracts and decentralized applications (dApps) as crucial use cases for Ethereum. Nathan McCauley, CEO of Anchorage Digital, echoed this sentiment, noting that Ethereum ETFs will have a similar impact to Bitcoin ETFs. Anchorage Digital focuses on cryptocurrency custody and institutional infrastructure.
“What the ETF wrapper did for Bitcoin is now possible for Ethereum,” McCauley told IBD. He suggested that the spot ETF provides a regulated and accessible path to institutional investment, potentially unlocking billions in capital.
According to Farside Investors, spot Bitcoin ETFs received approximately $13.44 billion in inflows as of May 23.
Ethereum Price Action
Following the news, Ethereum rose to $3,750 on Friday afternoon but remained below Thursday’s high of $3,894. Previous reports about the SEC’s potential step towards spot ETF certification had already boosted Ethereum prices.
Despite these gains, Ethereum is still trading below its 52-week high of $4,092 and its November 2021 record of over $4,800. However, Ethereum has increased by more than 64% in 2024.
Bitcoin also made gains, rising to over $68,900 on Friday, approaching its Thursday high of $69,440. On Monday, Bitcoin surpassed $70,000 but remains below the record high of $73,798 set on March 14. Bitcoin is also up around 64% this year.
Among cryptocurrency stocks, Coinbase (COIN) rose 8.6% on Friday, surpassing its 50-day moving average. This followed a 5.5% drop on Thursday which saw shares fall below this key level.