Introduction
On May 23, 2024, the U.S. Securities and Exchange Commission (SEC) made a historic decision to approve eight spot Ether (ETH) Exchange-Traded Funds (ETFs). This groundbreaking approval marks a significant milestone for the cryptocurrency market, particularly for Ether, the second-largest cryptocurrency by market capitalization.
Details of the Approval
The SEC approved proposals from three major exchanges: NYSE Arca, Nasdaq, and Cboe BZX Exchange. Each proposal aimed to list and trade shares of Ether-based Exchange-Traded Products (ETPs). The approved ETFs are:
- Grayscale Ethereum Trust (NYSE Arca)
- Bitwise Ethereum ETF (NYSE Arca)
- iShares Ethereum Trust (Nasdaq)
- VanEck Ethereum Trust (Cboe BZX)
- ARK 21Shares Ethereum ETF (Cboe BZX)
- Invesco Galaxy Ethereum ETF (Cboe BZX)
- Fidelity Ethereum Fund (Cboe BZX)
- Franklin Ethereum ETF (Cboe BZX)
ETF tracker courtesy of Blockworks.
Key Differences Among the ETFs
While all eight ETFs are designed to hold spot Ether, there are some key differences among them:
- Grayscale Ethereum Trust: Focuses solely on holding Ether without cash or cash equivalents.
- Bitwise Ethereum ETF: Holds both Ether and cash equivalents, offering a more diversified approach.
- iShares Ethereum Trust: Similar to Bitwise, it includes cash equivalents alongside Ether holdings.
- VanEck Ethereum Trust: Offers a straightforward approach by holding Ether and cash.
- ARK 21Shares Ethereum ETF: Known for its innovative investment strategies, this ETF also includes cash holdings.
- Invesco Galaxy Ethereum ETF: Combines Ether and cash equivalents, leveraging Invesco’s extensive market expertise.
- Fidelity Ethereum Fund: Utilizes Fidelity’s strong financial infrastructure, holding both Ether and cash equivalents.
- Franklin Ethereum ETF: Part of the Franklin Ethereum Trust, it also balances Ether holdings with cash equivalents.
Market Reaction and Impact
The approval led to a surge in Ether’s price, reaching $3,806 shortly after the announcement. However, shortly after, the broader market, aside from Chainlink ($LINK,) seemed to dip back down to pre-announcement levels.
This trend reflects the “buy the rumor, sell the news” phenomenon often observed in financial markets.
Crypto commentator Zach Rynes (CLG) noted that the lack of sustained movement suggests that “everyone who wanted to buy the approval already did,” among other factors, such as the simple fact that the approval does not immediately equal new capital inflow right away. Despite the short-term volatility, analysts predict that the actual launch of these ETFs will attract substantial institutional investments, potentially driving Ether’s price higher in the long term.
Comparing to Recent Crypto Developments
This development comes on the heels of other regulatory advancements in the crypto space. The approval of spot Bitcoin ETFs earlier this year set a precedent, and the SEC’s decision to greenlight Ether ETFs indicates a growing acceptance of cryptocurrencies within traditional financial markets. This move contrasts sharply with the ongoing legal and regulatory uncertainties faced by other crypto assets, emphasizing the still-volatile and rapidly evolving nature of the crypto regulatory landscape. For more details, you can find the full PDF from the SEC, here.
