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The U.S. Securities and Exchange Commission (SEC) has approved eight applications for spot Ethereum ETFs, marking a significant milestone for the cryptocurrency industry.

The approval, announced on May 23, 2024, allows Ethereum (ETH) to trade on Wall Street, and follows the earlier approval of spot Bitcoin ETFs in January.

The newly approved ether ETFs will enable investors to gain direct exposure to Ethereum (ETH), the second-largest cryptocurrency by market capitalization, without needing to purchase and store the digital asset themselves.

The SEC’s approval covers eight funds: Grayscale Ethereum Trust, Bitwise Ethereum ETF, iShares Ethereum Trust, VanEck Ethereum Trust, ARK/21Shares Ethereum ETF, Invesco Galaxy Ethereum ETF, Fidelity Ethereum Fund, and Franklin Ethereum ETF.

Celebrating the approval Grayscale made a post on X stating “Today, the SEC’s Division of Trading & Markets approved Grayscale #Ethereum Trust’s (ticker: $ETHE) Form 19b-4. We appreciate the opportunity to engage constructively with regulators as they review spot Ethereum ETFs.”

The decision omes as a surprise to many, as industry experts previously considered the likelihood of approval to be low.

Bloomberg ETF analysts James Seyffart and Eric Balchunas had earlier increased their odds of approval from 25% to 75% just days before the announcement, reflecting growing optimism following unexpected positive engagement from the SEC.

Although these ETFs have been approved, they are not yet ready for trading.

The next step involves the approval of the S-1 registration documents, a process that could take weeks to months.

The rapid approval follows multiple pro-crypto votes within the U.S. Congress, indicating a broader shift towards regulatory acceptance of cryptocurrencies.

The House’s passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), aiming to provide legal clarity for crypto, further underscores this trend.

The approval of spot Ethereum ETFs signifies a major regulatory shift. This development comes amid a lawsuit from Consensys alleging that the SEC had secretly considered ETH to be an unregistered security.

However, the SEC’s approval suggests that Ethereum is not currently viewed as a security, which is a significant victory for crypto advocates.

To facilitate approval, several issuers removed language regarding the staking of customer ETH, aligning with the SEC’s stance on staking services.

Market reactions to the approval have been positive, with Ethereum’s price experiencing a significant rally.

The success of Bitcoin spot ETFs, which have attracted nearly $13 billion in net inflows, suggests that Ethereum ETFs could also see substantial market interest and investment.

The introduction of these ETFs will enable traditional financial institutions and investors to gain exposure to Ethereum without directly holding the cryptocurrency, potentially driving further demand and adoption.

The post U.S. SEC approves first spot Ethereum ETFs: but not yet ready for trading appeared first on Invezz

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