Despite the SEC’s approval of spot Ethereum exchange-traded funds (ETFs), Ethereum’s price has shown little movement. On May 23, the SEC approved 19b-4 applications from major financial firms, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. However, Hashdex’s application was not approved.
Ahead of the SEC’s landmark decision, Ether’s price fell by 3.4%, rebounding by around 5% shortly after. As of now, Ether is trading at $3,701, with a 24-hour trading volume of $47.5 billion, according to CoinMarketCap.
The approval marks a significant step, allowing these firms to list and trade spot Ether ETFs on their respective exchanges. However, these ETFs cannot start trading until the issuers secure the SEC’s approval for their S-1 registration statements, a process that may take several weeks or months. Georgii Verbitskii, founder of TYMIO, noted that the SEC typically takes several weeks to a few months to review and provide feedback on S-1 registrations.
The SEC’s directive to expedite 19b-4 filings surprised many, particularly with the removal of staking from several applications. Some industry insiders speculate that political pressure may have influenced the SEC’s swift action. A bipartisan group of lawmakers had urged the SEC to approve these ETFs, arguing that the precedent set by Bitcoin ETFs should extend to Ethereum.
Implications for Ether’s Regulatory Status
The approval of Ethereum ETFs is seen by some industry experts as a subtle indication that the SEC does not consider Ether a security. Bloomberg ETF analyst James Seyffart remarked on the Bankless podcast that by approving these commodities-based trust shares, the SEC implies it will not pursue Ether as a security. Digital asset lawyer Justin Browder concurred, stating that if Ether ETFs get S-1 approval, it would settle the debate over Ether’s status as a security.
However, not everyone agrees. Verbitskii cautioned that the SEC’s approval does not necessarily mean they no longer view Ethereum as a security. Finance lawyer Scott Johnsson also pointed out that the SEC did not confirm Ether’s non-security status in its approval order, indicating that the issue was sidestepped.
Market Reactions and Future Expectations
Following the SEC’s approval of Bitcoin ETFs in January, Bitcoin’s price rose significantly. Sumit Gupta, co-founder of CoinDCX, suggested that a spot Ether ETF could drive a similar rally of up to 60%. Lennix Lai, OKX’s chief commercial officer, highlighted the potential for substantial institutional demand for spot Ethereum ETFs, envisioning passive capital inflow from institutional players of around $300-500 million in the first week.
Despite these optimistic predictions, some experts caution that Ether’s price might not immediately surge. Asal Alizade, co-founder of Blocklogica, noted that the main market shift occurred with the approval of Bitcoin ETFs, facilitating the entry of traditional investment institutions. Thus, the Ether ETF approval might not lead to a dramatic market change but could gradually influence Ethereum Virtual Machine (EVM)-based assets and create minor trends in the crypto market.
Benjamin Charbit, CEO of Darewise Entertainment, added that the ETF approval had likely been priced in for some time, similar to the Bitcoin ETF approval earlier in the year. He viewed this as a sign of maturity in the market, aligning with traditional finance trends.
The SEC’s approval of spot Ether ETFs is a significant milestone, yet it remains to be seen how this will impact Ethereum’s price and the broader crypto market in the long term.
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