Ethereum ETFs approved! Here is all you need to know
Yesterday, the American Securities and Exchange Commission (SEC) approved the applications for spot Ethereum, or — to be precise — Eth, exchange-traded funds (ETFs). This follows the approval of Bitcoin spot ETFs in January, marking another significant and somewhat unexpected development in the crypto asset space. This is all you need to know about the spot Eth ETFs.
What does the approval mean?
The SEC’s green light for Eth ETFs significantly broadens access to the crypto asset Ethereum for a wider audience, particularly institutional investors such as companies, insurance firms, pension funds, etc. While these entities could previously have hold Eth directly, the introduction of ETFs provides various simplifications. Investors are very familiar with the financial market products of ETFs. They are comfortable with their structure, understand their risks etc. Consequently, the potential market size for Eth will now considerable grow due to the availability of these ETFs.
Which ETFs were approved?
A total of eight ETFs received approval, namely:
- Grayscale Ethereum Trust
- Bitwise Ethereum ETF
- Blackrock’s iShares Ethereum Trust
- VanEck Ethereum Trust
- ARK 21Shares Ethereum ETF
- Invesco Galaxy Ethereum ETF
- Fidelity Ethereum Fund
- Franklin Ethereum ETF
The approval process we have seen yesterday mirrors that of the Bitcoin ETFs, where all applications were approved simultaneously.
Why is this approval somewhat surprising?
Historically, the SEC has been quite cautious regarding cryptocurrencies other than Bitcoin, often calling them securities. Just a few weeks ago, the approval of Eth ETFs seemed somewhat off the table. However, leading analysts such as Bloomberg’s Eric Balchunas and James Seyffart recently adjusted their forecasts for approval from a 25% likelihood to 75%. This super sudden and short-term shift, driven by increased interactions between the SEC and applicants after months of silence, suggests a political influence.
How much volume is expected for Eth ETFs?
Predicting volume — or assets under management — is of course challenging. While Bitcoin spot ETFs set numerous records, it’s unlikely that Eth ETFs will match these figures. Bitcoin remains the leading crypto asset by market capitalization and investor interest, amongst others. As a ballpark estimate, analysts Balchunas and Seyffart estimate that Eth ETFs might capture 10 to 20% of the assets under management seen in Bitcoin ETFs.
For further details on the impact for Europe and the next steps, check out the following blog post:
