It’s been almost six months now since Spot ETFs for Bitcoin hit the market. Gary Gensler, the head of the SEC, ended up giving in to the financial giants. You know how fast our ecosystem is moving and just a few days later, the question of a Spot ETF for Ethereum was on the table.
Announcements that shake up the crypto industry
Recently we had a series ofannouncements really game changer for the entire ecosystem. The SEC showed us some green and unripe things last week and the markets went completely crazy. On May 20, Vitalik Buterin’s blockchain showed us a green candle from the lord. 20% increase in just 24 hours.
So why all this excitement? where are we on these famous Ethereum ETFs? It’s been a pretty trying week, and I can tell you that you won’t be disappointed.
A tweet that changes everything for Ethereum ETFs
It all started with a tweet from Eric Balchunas, the ETF analyst from Bloomberg who I have already spoken to you about several times. According to him, the chances that a spot ETF for Ethereum will be approved very soon are very high.
He explains that he changed his mind about it after hearing about the SEC and its impending decision on the matter. He speaks of a 180-degree turnaround from Gary Gensler’s office and that there is a good chance that an ETF for the second-largest cryptocurrency will be approved on May 23.
Why May 23 in particular? There was a deadline. Gary Gensler was expected to comment on the Ethereum ETF proposal from VanEck, the famous fund manager. In the process, Ethereum is racing and crypto media around the world are relaying the information.
SEC surprises everyone: Ethereum ETFs almost approved!
On May 23, the SEC surprised everyone by approving the first spot ETFs on Ethereum. They weren’t bad at all. opposed to their approvaland preferred to classify the second cryptocurrency on the market as a security.
This statement needs to be qualified. This is not a total endorsement of this type of product. The SEC has Approved Forms 19b-4 for ETFs all in delaying the approval of Forms S-1. Both must be accepted in order to launch an ETF. This approval period allows for dialogue with issuers without having to reject their applications. So we have to wait a few weeks. Until July 4, it seems, the time for the administrative back-and-forth to be completed.
In order not to discriminate against anyone, they approved 9 ETF Ethereum coming from titans of traditional finance. Among the lot, we find VanEck, who really didn’t waste any time. They directly released an advertising spot for this new financial product. BlackRock is obviously involved and the ticker associated with the ETF of Larry Fink’s empire will be ETHA.
The motivations behind this turnaround
Quite a few people have asked this question. Why did the SEC decide to go off on a tangent to this extent? The reason is probably political. The US elections are fast approaching. Donald Trump has clearly taken the upper hand over Joe Biden on the subject of cryptos. Of course, it’s a substantive subject, but it’s still a subject for Americans. During elections, votes must be won. Trump understands this well and he is particularly bullish towards our industry, which could well push Biden to follow in his footsteps.
Furthermore, the American legislative context moving a lot lately. Recently, the House of Representatives passed the CBDC Anti-Surveillance State Act which opposes the establishment of a central bank digital currency in the United States.
This is not the only important text that has been voted on recently. FIT21, a major bill affecting the crypto sector, has been passed by the House of Representatives. This text aims to explain the regulation of the crypto sector, reducing SEC oversight of cryptocurrencies and transferring some of its skills to the CFTC.
Implications for Ethereum Staking
One question remains unanswered: what is staking ? The second cryptocurrency on the market operates on proof of stake and staking allows yields to holders. The SEC has already taken measures against Ethereum staking services of some exchanges. In February 2023, Kraken was forced to cease its staking activities for its American customers and pay a fine of $30 million. In June 2023, Coinbase was attacked by the government agency over a similar service.
In this context, we do not really know what will happen to staking in the case of ETFs. Fidelity has announced that funds from their ETF will not be permitted for staking. If staking is not authorized, we end up with ETH without yield and with high fees, which is disadvantageous. If staking is allowed, ETF issuers take money from customers, set up nodes in their name, which is not the best level of decentralization.
Ethereum spot ETFs are now on track. They are expected to list on the NASDAQ, NYSE, and CBOE. The SEC has finally relented after more than a decade of rejecting Bitcoin spot ETF applications due to fears of market manipulation. With Ethereum spot ETFs, that dam is breaking down, opening the door to new possibilities for the crypto ecosystem.
The events of the last few weeks are very promising for the adoption of cryptos by traditional finance. We will have to closely monitor what is happening in the United States and see how Europe will react. In the meantime, join our live news Telegram channel to follow all the future twists and turns of the crypto sector. The link is in the description. Thanks to Thomas who helped me create this article, it was Romain from Journal du Coin, see you next week for a new analysis! Bye!
