The price of Ethereum has barely budged despite the US Securities and Exchange Commission (SEC) giving the green light for a faster launch of Ethereum exchange-traded funds (ETFs) in the US.
Prior to the landmark approval by the SEC, Ethereum fell by 3.4%, and rebounded by about 5% shortly after. As of now, Ethereum is trading at $3,701, with a 24-hour trading volume of $47.5 billion, according to CoinMarketCap.
On May 23, the Securities and Exchange Commission consent 19b-4 applications from financial industry giants such as VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise. This crucial approval allows these companies to list and trade Ethereum ETFs on their exchanges.
Hashdex was the only ETF issuer that did not receive regulatory approval that day.
However, the journey is far from over for ETF issuers. They still must get SEC approval for their S-1 registration statements before spot ETFs can officially begin trading, which could take weeks or months.
“The SEC typically takes several weeks to a few months to review and provide comments on S-1 filings. This period includes a detailed examination of filings to ensure compliance with regulatory requirements. In the worst case scenario, TYMIO founder Georgi Verbitsky told crypto.news. We look forward to the end of the summer.”
Meanwhile, the Securities Regulatory Commission's May 20 guidance to speed up 19b-4 filings surprised many, especially with the notable removal of staking from many applications. The unexpected move sparked speculation about the motives behind the SEC's quick action.
Some industry insiders suggest that political pressures played a role. Prior to the approval, a bipartisan group of lawmakers urged the SEC to approve these ETFs, arguing that the precedent set by Bitcoin ETFs should be extended to Ethereum.
Does ETF approval mean ETH is no longer a security?
Meanwhile, industry experts view the approval of Ethereum ETFs as a subtle but important signal from the SEC, implying that Ethereum is not considered a security.
“These are commodity-based credit stocks, so the SEC, by approving them, is explicitly saying that they will not go after Ethereum as a security.” He said Bloomberg ETF analyst James Seyphart on the Bankless podcast.
Digital assets lawyer Justin Browder agrees, Confirming That if ETFs get S-1 approval — the final hurdle to trading — then “the debate will end: ETH is not a security.”
However, other market players like Verbitskii believe that the SEC may still target ETH.
“The SEC’s approval of an exchange-traded fund does not mean that they no longer consider Ethereum to be a security,” Verbitsky said. “It simply means that the ETF meets regulatory standards for trading and investor protection (or at least they think so.”) “)
Financial attorney Scott Johnson also noted that the SEC did not confirm Ethereum's non-security status in its consent order, noting that it “completely avoided” the issue.
An official statement from the SEC and some of its commissioners is expected in the near future, which may provide further clarity on this issue.
The approval of Ethereum ETFs comes four and a half months after the SEC approved several Bitcoin ETF applications on January 10, setting a precedent for the industry. Following the recent announcement, industry experts expressed their expectations for further growth.
Sumit Gupta, co-founder of CoinDCX, noted that the price of Bitcoin rose significantly after the ETFs began trading in January, suggesting that an Ethereum spot ETF could lead to a rally of up to 60%.
“Bitcoin rose to more than $73,000 from $42,000 in the two weeks after the ETFs began trading on January 11. Data shows that 10 spot Bitcoin ETFs in the US held 548,556 BTC worth $36 billion in four months. Likewise, the Ethereum (ETH) spot ETF is expected to lead to a rally of up to 60%,” Gupta told crypto.news.
OKX Chief Commercial Officer Linx Lai highlighted the potential for significant institutional demand for an Ethereum spot ETF, envisioning a passive capital inflow from institutional players of around $300-500 million in the first week.
He stressed the importance of this development, noting that designing Ethereum as a Proof-of-Stake (PoS) token could attract significant institutional interest.
“In addition, Ethereum offers more utilities than many realize. It is the preferred product for participating in DeFi products, such as staking. As such, the approval of an ETH ETF could attract more users to engage with Web3 products.”
However, some experts warn that the price of ether may not rise immediately despite the historical approval.
Asl Alizadeh, co-founder of Blocklogica, explained that the major shift in the market occurred with the approval of Bitcoin ETFs, which facilitated the entry of greater cash flow from traditional institutional investors. Therefore, the approval of the ETF may not lead to a radical change in the market, but it may gradually affect EVM-based assets and create minor trends in the cryptocurrency market.
Benjamin Charbet, CEO of Darewise Entertainment, added that the ETF approval will likely be priced in for some time, similar to the Bitcoin ETF approval earlier in the year. “I don't see that as a negative sign; “On the contrary, it shows a form of maturity similar to what happened decades ago in traditional finance (TradFi),” Charbit said.