Bitcoin ETFs Create Optimism Around Ether ETFs, But Are They Real?
The United States Securities and Exchange Commission (SEC) approved 10 spot Bitcoin exchange-traded funds (ETFs) on January 10, allowing investors in the US to invest in Bitcoin-backed securities. Spot Bitcoin ETFs began trading on public exchanges on January 11th, with billions coming in since then.
The approval of spot Bitcoin ETFs was a pivotal moment in Bitcoin's history after several years of rejections. However, with the Spot Bitcoin (BTC) ETF now approved, all eyes have turned to Ether (ETH) ETF applications, with the final deadline in May.
In the year Major financial institutions, including BlackRock, ARK Invest, Fidelity, Invesco Galaxy and others, are filing for the SpotEther ETF by 2023. Arch was the first to acquire the SpotEther ETF in September 2023, followed by BlackRock and others.
The SEC has postponed its decision on spot ether ETFs several times, similar to the many delays in deciding whether to approve spot BTC ETFs.
Although the seven Ether ETF applicants have different deadlines, the SEC may issue its decision on all applications at once, such as BTC ETFs.
As the deadline approaches, ETF experts and the crypto community are divided on whether the ETH ETF will be approved in 2024.
On the one hand, Bloomberg ETF analyst James Seifert said that US securities regulator Etern has green-lit Ethereum futures ETF. .AAA is received as a commodity when green-lighted.
Therefore, it is only a matter of time before the SEC approves the Ether ETF. According to Eric Balchunas, a senior analyst at Bloomberg, there is a 70% chance that the Ethereum ETF will be approved in May.
On the other hand, Morgan Creek Capital CEO Mark Yusko gives a less than 50% chance that spot ether ETFs will be approved in the US by 2024. They indicated in the message the date on which the products were approved. He added that the SEC may still consider Ether a security — unlike Bitcoin (BTC), which is considered a commodity.
Gensler has often argued that all cryptocurrencies except Bitcoin are securities. However, according to Bloomberg analyst James Seifert, “The SEC has implicitly accepted Ethereum as a commodity.
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Rika Khurdayan, US chief legal officer of European crypto exchange Bitstamp, told Cointelegraph that the SEC will approve the spot Ether ETF, but the approval process may take longer than for Bitcoin.
“However, the SEC has compared Ethereum's unique features to Bitcoin, including its underlying technology, capabilities, and complex history and conditions of creation, so the approval process could be lengthy. I think the SEC may want to look at the Bitcoin ETF market before approving another cryptocurrency ETF.
The Spot Ether ETF is compelling, but questions remain
Ether has maintained the second position in terms of crypto market capitalization for years, and there is already trading of Ether futures in the US markets.
However, the Ethereum blockchain and its functions are very different from Bitcoin, which according to experts, can be a difficult path for regulators to navigate.
Ether, unlike BTC, does not have a fixed market supply, and the native token supports staking, which allows holders to lock up their Ether for a certain period of time and receive rewards based on their stake.
Kathy Yoon, general counsel of the Wormhole Foundation at Web3 development firm, told Cointelegraph that the SEC will eventually approve the ETH ETF, but the stock issue is still unresolved.
“The willingness of traditional players to adopt sales practices, particularly through the use of service providers, many of which are under intense scrutiny from the SEC or regulators themselves, raises questions. Are they themselves?”
The launch of spot BTC ETFs indicated that the traditional financial market has a good appetite for crypto-based securities, as products quickly saw billions in daily volume, with 11 spot Bitcoin ETFs with a daily volume of 500, all 500 ETFs making three times the daily volume. In the year Coupled on January 16, 2023, it remains to be seen whether the same trend will follow for Ether.
Let me put into context how insane that amount of $10B in the first 3 days is. In the year There were 500 ETFs launched in 2023. Today, they made $450 million in voice-overs. The best is 45 million. And many had months to go. $IBIT alone is seeing more activity than the entire '23 Freshman… https://t.co/wV1zQFtPW1
— Eric Balchunas (@EricBalchunas) January 16, 2024
Despite the current challenges with the SEC, the belief that a place Ether ETF will be approved in 2024 stems from several reasons: the parallel listing and regulation of the future of Bitcoin and Ethereum, which saw a record participation of large traders in the past year, place them. As equivalent assets in the eyes of the SEC. In addition, continued market strength and increasing demand from institutional investors will put additional pressure on regulatory approval.
BlackRock ETF Record with Gary Gensler
BlackRock has played a pivotal role in the adoption of BTC ETFs. SEC Rejects Several Bitcoin ETF Proposals Before 2023 However, the crypto community gained confidence in the green light after BlackRock entered the BTC ETF competition, rejecting 575 approvals once.
UPDATE: The last time the SEC rejected a @BlackRock ETF was 2014.
– It should be noted that the rejection at the time is not limited to the $BLK file. – @BlackRock has an ETF record of 575 approvals with 1 (sorta) rejection. – $BLK $BTC ETF Expected to Launch in 2024
— Andrew (@AP_Abacus) September 6, 2023
With the deadline for spot ether EFAs in May, many wonder if BlackRock will continue its record.
Jag Kooner, Head of Derivatives at Bitfinex, told Cointelegraph that the entry of major financial firms such as BlackRock into the Bitcoin ETF market was seen as a positive sign of the general acceptance of crypto ETFs, but warned of early pushback from regulators.
“Institutional interest tends to stabilize the market in the eyes of regulators; however, the application from Grayscale to convert Ethereum trust into an ETF and the SEC's push from BlackRock have received an answer. The bottom line may be the classification of Ether as a security or commodity.”
A potential roadblock on Ether's path to spot ETFs could be Gensler's view on the crypto market. Gensler has repeatedly stated that he believes every cryptocurrency except Bitcoin is a security.
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Mark D'Annunzio, general counsel at crypto trading firm Bakkt, told Cointelegraph that Gensler's approach to crypto could be a red flag in the direction of other crypto-based ETFs.
“Gensler pointed out that the recent approvals for spot Bitcoin ETFs are limited to a ‘non-secured commodity' (i.e. Bitcoin). Gensler also reiterated that he believes most crypto tokens are securities, and it seems that uncertainty about the commission's view of ETH needs to be resolved somewhere before the ETF is approved.
D'Annunzio added that if and when the Ether spot ETF is approved, “it needs regulatory clarity and will benefit from the real-world results of Bitcoin ETFs.”
