As reported by Reuters, The U.S. Securities and Exchange Commission (SEC) has given its approval to applications from Nasdaq, CBOE, and NYSE to list exchange-traded funds (ETFs) tied to the price of Ethereum, potentially paving the way for the products to begin trading later this year.
The approval, announced on Thursday, came as a shock, as the cryptocurrency industry had been expecting the SEC to reject the filings. This decision is a significant win for the firms seeking to launch the ETFs and for the cryptocurrency industry as a whole.
Nine issuers, including VanEck, ARK Investments/21Shares, and BlackRock (BLK.N), are hoping to launch ETFs tied to the price of Ethereum. This move follows the SEC's approval of Bitcoin ETFs in January, which was considered a major turning point for the industry.
Andrew Jacobson, vice president and head of legal at 21Shares, expressed excitement about the approval, calling it "a significant step" towards getting the products trading.
The deadline for the SEC to decide on VanEck's filing was Thursday, and market participants were anticipating a rejection due to the lack of engagement from the SEC. However, in an unexpected turn of events, SEC officials asked the exchanges to quickly refine the filings, leading to a rush to complete the necessary work in just a few days.
While the reasons for the SEC's change of heart are not clear, Rob Marrocco, global head of ETP listings at Cboe Global Markets, highlighted the potential benefits of spot Ethereum ETFs for U.S. investors.
Nasdaq and NYSE declined to comment on the approval, and when asked about the Ethereum ETFs at an industry event, SEC Chair Gary Gensler declined to comment, maintaining his skeptical stance on cryptocurrencies.
The exchange applications sought SEC approval for a rule change required to list new products, but the issuers still need the SEC to approve ETF registration statements detailing investor disclosures before they can initiate trading.
There is no set time frame for the SEC to decide on those statements, and it remains unclear how long the process will take.
The SEC's rejection of spot Bitcoin ETFs for over a decade due to concerns about market manipulation was overturned after Grayscale Investments won a court challenge last year.
Sui Chung, CEO of CF Benchmarks, the index-provider for several Bitcoin and Ethereum ETFs, noted the complexity of Ethereum compared to Bitcoin and suggested that the SEC's review of the statements could take months. However, he also mentioned that the established template provided by the Bitcoin ETFs could limit the SEC's ability to delay the process.
With more than $30 billion already invested in crypto ETFs by various investors, including hedge funds, wealth advisors, and retail investors, Thursday's decision is seen as a positive push for the cryptocurrency industry's efforts to integrate into mainstream finance.
This approval comes at a time when the UK regulator has also approved listed cryptocurrency products, and the U.S. House of Representatives passed a landmark bill seeking to provide regulatory clarity for cryptocurrencies. Though the bill still needs to pass the Senate, its large bipartisan support is considered a major approval for the industry.
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