• The SEC has approved eight spot Ethereum ETFs from major firms like BlackRock and Fidelity, just four months after approving spot Bitcoin ETFs.
  • This move follows unexpected engagement from the SEC with issuers and legislative pressure from bipartisan lawmakers, marking a significant expansion in cryptocurrency investment products.

In a landmark move, the U.S. Securities and Exchange Commission (SEC) has approved eight spot Ethereum ETFs in an omnibus order. This decision comes just four months after the SEC gave the green light to spot Bitcoin ETFs, marking a significant expansion in the realm of cryptocurrency investment products.

The approved 19b-4 forms pave the way for ETFs from prominent firms such as BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. While this approval is a major milestone, the ETF issuers must still clear another hurdle: their S-1 registration statements need to go effective before trading can commence. The SEC has only recently initiated conversations with the issuers regarding these S-1 forms, leaving the timeline for their approval uncertain. Analysts speculate that the process could span from a few weeks to over three months.

Ethereum ETFs: A Sudden Change of Heart?

The approval of Ethereum ETFs came as a surprise to many, given the SEC’s previously perceived reluctance. The sudden shift in the SEC’s stance, where they requested the submission of 19b-4 forms from issuers, left parts of the agency seemingly caught off guard. Speculations abound regarding the reasons behind this abrupt change, with some attributing it to political pressures.

Earlier this week, bipartisan House lawmakers urged the SEC to approve these ETFs. They argued that following the approval of Bitcoin ETFs, allowing Ethereum ETFs would demonstrate consistency in the SEC’s application of its standards. This legislative push may have played a crucial role in the SEC’s decision-making process.

The market reacted swiftly to the rising chances of approval, with the Grayscale Ethereum Trust discount narrowing from -24% to -6%. This transition is expected to facilitate the conversion of the trust into an ETF, enabling holders to exchange their shares for the cash value of the underlying ether.

Since the introduction of Bitcoin ETFs, the market has seen substantial growth, with an additional 207,000 bitcoins, worth $14 billion, accumulated on top of the 621,000 bitcoins held in the Grayscale Bitcoin Trust at the time of its conversion into an ETF. However, experts like Bloomberg ETF analyst Eric Balchunas predict that Ethereum ETFs may not achieve the same level of traction. He estimates that Ethereum ETFs could attract 10 to 15% of the assets garnered by their Bitcoin counterparts, which translates to around $5 to $8 billion—a commendable figure for any typical launch within the first couple of years.

As the cryptocurrency market evolves, the approval of these Ethereum ETFs marks a significant step in the mainstream acceptance and integration of digital assets into traditional financial markets.