In terms of Crypto, Exchange-traded funds, or ETFs backed by spot Ethereum (ETH), have received preliminary approval from the U.S. Securities and Exchange Commission to trade on U.S.-based stock exchanges. The SEC granted approved exchange petitions to list and trade spot ether ETFs on May 23, paving the path for fund approvals. Only Ethereum futures ETFs had been permitted to trade in the US until now.
ETFs are financial instruments that resemble mutual funds. On regular stock markets, they trade more like stocks, though. Complicated derivative investments, known as futures, track an asset’s future price. A spot ETF, on the other hand, tracks the current price of an investment. Indeed, investors and cryptocurrency enthusiasts are curious about the implications of the possible approval of ETH ETFs.
SEC Approves Exchange Listings of Spot Ethereum ETFs
On May 23, the SEC released updated regulations allowing eight spot ether funds to be listed and traded on three different exchanges. The applications of the following exchanges have been approved, together with the ETFs that they are permitted to list:
Even though this is a significant victory for supporters of ETH ETFs, the issuers still need to receive SEC approval before the funds can be made available for trade. Not all funds will be approved; this process could take weeks or months. Nevertheless, this is a big step forward, considering that, until Monday, May 20, the likelihood of approval seemed remote.
On May 20, rumors spread that the SEC had asked prospective issuers for new information. Crypto researchers and investors saw this as a fresh sign of hope that ETFs would be approved by the deadline of May 23.
Many had previously assumed that the SEC’s apparent disinterest in the ETF applications meant the applications would be rejected. However, ETH increased by over 20% before the deadline as investor confidence recovered. Regarding Crypto, Ethereum and Bitcoin saw comparatively little price movement after the SEC ruling, most likely because more approvals are required before trading starts, and the approval was priced in.
What the ETH ETF Approval Means for Ethereum
A major impact of spot ether ETF approvals is the concept that Ethereum is a commodity rather than a security. Ethereum is a commodity, even though the SEC did not state it; the ETF products were called “commodity-based trust shares.” This phrasing effectively ends the discussion on how to categorize unstacked Ethereum.
This classification may have wide-ranging and important consequences. First, the SEC’s ability to regulate cryptocurrencies may be more constrained if more are categorized as commodities. Alternatively, the U.S. Commodity Futures Trading Commission, or CFTC, may be more responsible for regulation.
Apart from the ruling on the ETH ETF, the U.S. House of Representatives recently passed a bipartisan plan that would essentially divide regulation between the SEC and CFTC. Cryptocurrency regulations on commodity categories would be handled by the CFTC, while the SEC would oversee them as securities.
Apart from the ruling on the ETH ETF, the U.S. House of Representatives recently passed a bipartisan plan that would essentially divide regulation between the SEC and CFTC. Cryptocurrency regulations of commodity categories would be handled by the CFTC, while the SEC would oversee them as securities.
XRP, SOL: Next in Line?
In Terms of Crypto, Even though spot Ethereum ETFs haven’t been approved completely yet, some people are already speculating about which cryptocurrency might be the next to get its own spot ETF. Solana (SOL) and Ripple’s XRP (XRP) are at the forefront of these conjectures. Specifically, analysts and investors appear to be thinking about Solana, an Ethereum competitor, next.
SOL is the fifth-largest cryptocurrency by market capitalization, behind only Binance Coin (BNB) and stablecoin Tether (USDT) relative to ETH. Many think that now that the SEC is moving toward legalizing Ethereum’s spot ETFs, it would be difficult to reject Solana given the similarity in their core technologies. While cryptocurrency aficionados are undoubtedly excited about this possibility, it’s crucial to remember that even if it does occur, it won’t happen for some time—probably not until 2025 at the earliest.
Crypto Pushes Toward Mainstream Acceptance
After years of legal disputes and opposition from the SEC, the regulatory body seems to be more welcoming to the cryptocurrency sector. A new age of mainstream finance acceptance of cryptocurrencies may be heralded by the SEC’s softer regulatory approach and an apparent shift in opinion among some lawmakers and parties. In Terms of Crypto, Donald Trump, the former president, recently modified his position on cryptocurrencies, expressing his support on social media and even taking donations in Bitcoin for his bid to win the presidency in 2024.
In addition, many people have conjectured that political pressure from President Joe Biden’s administration may have played a role in the SEC’s hurried decision to allow spot Ethereum ETFs. These days, nobody wants to be incorrect about cryptocurrencies. This is encouraging for the future of the cryptocurrency market.