Ethereum ETFs Approved by SEC, Bringing Popular Funds to Second-Largest Cryptocurrency

U.S. regulators have given final approval to spot exchange-traded funds holding Ethereum’s ether, {{ETH}}, giving Americans access to the second-largest cryptocurrency through easily tradable instruments.

The decision concludes a years-long process for the Securities and Exchange Commission to approve ether ETFs and follows the regulator’s approval of bitcoin {{BTC}} ETFs in January. Packaging ether in an ETF could make it more attractive to traditional investors, as the funds can be bought and sold through traditional brokerage accounts. Since their debut in January, bitcoin ETFs have attracted tens of billions of dollars in investment.

Approval seemed uncertain a few weeks ago. But in late May, SEC officials suddenly began engaging with prospective ETF issuers after a long silence. Then, on May 23, the regulator approved a key application, paving the way for full approval with the final decision.

“We have now fully entered the crypto ETF era,” said Matt Hougan, chief investment officer at Bitwise. “Investors now have access to over 70% of the liquid crypto asset market through low-cost ETPs.”

“As the first to file for an Ethereum ETF in 2021, we have long believed that investors should be able to access Ethereum exposure in a vehicle they find accessible and familiar,” said Kyle DaCruz, head of digital assets at VanEck. “If Bitcoin is digital gold, Ethereum is the gateway to exposure through the open-source App Store and thousands of applications that will leverage its blockchain technology.”

Read more: Ethereum ETFs Could See Poor Demand, Two Research Firms Predict

In January, the approval and start of trading of spot Bitcoin ETFs, which became one of the most successful launches in terms of money flow velocity in the history of exchange-traded products, pushed the price of the largest cryptocurrency to new records, increasing by more than 58 percent in just two months.

Some analysts predict that a spot ETH ETF could push the price of ether to $6,500, while noting that the inflows into these funds would not be very high compared to their bitcoin-focused counterparts.

Research firm Steno Research predicts that newly launched ETFs could see inflows worth $15 billion to $20 billion in the first year, similar to what spot bitcoin ETFs have taken in in just seven months. Ethereum lacks the “pioneer advantage” that bitcoin has and lacks a strong narrative, such as the belief among many supporters that bitcoin is “digital gold,” the firm said in a report.

UPDATE (July 22, 2024, 21:35 UTC): Added comments from broadcasters.