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On Thursday evening, with traditional markets now closed, the SEC approved the issuer’s request to list the ETF based on the ETF’s spot price. Ethereum On Wall Street. The decision comes on the heels of the approval of a bitcoin ETF last January. In some ways, it’s a white swan for the industry, as few would have bet on it being approved on the first available date, which was January 23.
The operators were convinced of the delay. Instead, the regulator earlier this week asked the companies on the waiting list, which include Ark 21 Shares, VanEck, Fidelity and BlackRock, to provide more documents to enrich the request and “give up” the “staking” part of the ETF, a feature that allows those who invest directly in cryptocurrency to generate interest and hold it over time (a kind of coupon or dividend).
Ether is considered a commodity, not a security
Besides the surprising impact seen on the cryptocurrency market on Tuesday, where the price of Ethereum jumped from 2,800 to 3,800 in a matter of hours – the news is significant for the industry because following this decision, the Ethereum (Ethereum’s native token) blockchain – like Bitcoin, is considered a commodity, not a security. This diatribe has been going on for a while, and it gives us a glimpse into how difficult it is to classify cryptocurrencies using traditional schemes. “This decision will have at least some fundamental impacts on the market” explained Ophelia Snyder, co-founder and president of 21Shares. First, it provides greater clarity on ETH’s regulation in the United States, while providing investors with access to Ethereum through a secure and familiar structure. Similar to the approval of a Bitcoin ETF, this milestone also marks a major professionalization of the underlying asset market structure in the United States. ”
The market reaction is neutral from a financial point of view, also because the price acceleration is due to rumors that the US Securities and Exchange Commission (SEC), led by Gary Gensler, suddenly requested further documents a few days ago. But also because technically the game is not over yet. The eight issuers involved in the campaign (Grayscale, BlackRock, VanEck, ARK 21Shares, Invesco, Fidelity and Franklin Templeton) need to make their S1 registration statements effective. How long will it take? «It is difficult to answer this question at the moment. I can say that now we will start the process of reviewing the S1, and with the next statement from the SEC we will be able to have a clearer idea – emphasizes Snyder -. This process can take a few weeks, but it is difficult to give a precise answer at this early stage. ”
Differences between Ethereum futures and ETFs
It is worth noting that Ethereum futures have been available for years and are approved by the Commodity Futures Trading Commission. But there is an important difference between futures and ETFs that replicate spot (i.e. market prices). In the second case, the issuer must find collateral on the market, which could, in theory, increase buying pressure on the underlying asset if the net demand for the ETF is positive. This pattern has already been seen with Bitcoin, where the price of Bitcoin rose from 40,000 to 70,000 in the months after the ETF was approved, setting a record for net flows for such products. Obviously, it is uncertain whether the same will happen with Ethereum, but industry experts believe that in any case, the news is positive in terms of reputation, but most people still don’t know the real Achilles’ heel of the industry.
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