The Securities and Exchange Commission (SEC) has approved the New York Stock Exchange and Nasdaq to begin listing Ethereum exchange-traded funds (ETFs). Although it has not yet approved the asset management companies hoping to issue these new Ethereum funds, this decision marks an unexpected victory for these companies and the cryptocurrency industry. Until Monday, the market had expected the SEC to reject these applications.
The regulatory body has not disclosed a timeline. Jennifer Schonberger from Yahoo Finance analyzed the potential upcoming developments on the "Morning Brief" program and elaborated on recent comments from SEC Chairman Gary Gensler.
The SEC has approved rule changes, paving the way for the approval of spot Ethereum ETFs. The next step is for fund managers to gain institutional approval to launch ETF products. However, the timeline for this is still unclear.
Schonberger noted that while the SEC has given the green light for the New York Stock Exchange and Nasdaq to list exchange-traded funds holding Ethereum, it has not yet approved the asset management companies hoping to issue these new funds.
This move marks the first step toward allowing these ETFs to be traded. However, the SEC still needs to approve the filings of the actual fund management companies before these funds can begin trading, and the regulatory body has not disclosed when this might happen.
Schonberger pointed out that the companies applying for these Ethereum ETFs include some major Wall Street firms such as BlackRock, Fidelity, and Franklin Templeton, as well as some companies better known in the crypto world, including Grayscale and Bitwise.
They must agree that the Ethereum held in the ETFs will not be used for staking. This decision comes about four months after the SEC first approved a spot Bitcoin ETF, following years of denying approval requests.
At a meeting in Washington on Thursday morning, the CCG stated that the SEC is very committed to adhering to the law and court interpretations of the law. The SEC has officially taken up the work of former SEC Chairman Clayton in the field of exchange-traded products.
However, after more than twenty orders by the committee, the Washington, D.C. Court of Appeals had a different view. The SEC has now taken this into account and adjusted its stance.
Thus, Schonberger stated, we can see the SEC laying the groundwork for spot Ethereum ETFs. Speculation has already begun regarding the approval timeline for the actual fund management companies.
Meanwhile, analysts at TD Cowen said they were "surprised by the timing but not the outcome."
"Approval has been inevitable for years. We do think this paves the way for more cryptocurrency ETFs, although it doesn't indicate a change in the SEC's attitude towards cryptocurrencies. We still expect it to bring lawsuits against tokens and trading platforms," they added.
TD Cowen noted that the SEC's approval came about six months earlier than expected. The brokerage had anticipated that the institution would wait a full year after the launch of Bitcoin ETFs before considering Ethereum ETF applications and might delay any lawsuits until early 2025.
However, following the SEC's approval of cryptocurrency futures ETFs and the Bitcoin ETF earlier this year, approval became inevitable, making legal challenges less likely.
TD Cowen's team stated that the next step will be the approval of S-1 filings, which could take several weeks or even longer.
"That said, we don't see this as an insurmountable barrier," the analysts wrote.
"Our view is that ETFs reflecting a basket of tokens will also be approved within a year, although we will be watching to see if the initial basket only includes Ethereum and Bitcoin or if it will include other tokens," they added.
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