The first deadline for the United States Securities and Exchange Commission (SEC) to approve a spot Ether ETF is on May 23. If approved, it would be a significant event that could potentially change the current U.S. crypto regulation landscape. While many in the crypto community did not expect the SEC to approve a spot Ether ETF, recent reports indicate that it may be approved after all, as the SEC has been requesting updates from applicants and amendments to filings from U.S. asset managers.
According to Sebastian Heine, chief risk and compliance officer of Northstake, a spot Ether ETF would be a game-changer for the crypto ecosystem and traditional finance sectors. ETF analysts Eric Balchunas and James Seyffart believe that the SEC may be changing its stance on an Ether ETF, despite it being a politically contentious issue.
If the spot Ether ETF is approved, it is widely believed that the price of Ether will surge as it will attract new investors from traditional markets. Solo Ceesay, a former investment banker, believes that the potential inflow of money into Ethereum has been underestimated, as big institutional investors have yet to enter the market. However, there could also be a pullback in price after the initial surge, similar to what happened with Bitcoin ETFs.
Basel Ismail, CEO of Blockcircle, expects a short-lived pullback after the approval of the Ether ETF, as he believes it is not properly priced in yet. Peter M. Moricz, partnerships lead of bridge DLC.Link, predicts a buy-the-rumor, sell-the-news event after the approval. Nick Cowan, CEO of Valereum, also anticipates a pullback, as retail buyers may offer institutional holders an opportunity to sell their holdings.
Despite the potential pullbacks, many believe that the approval of a spot Ether ETF will have a bullish effect on the price of ETH in the long run. Manuel Villegas, a digital assets specialist at Julius Baer, notes that Ethereum’s value proposition is different from Bitcoin’s and it may take time for institutional investors to fully understand its potential.
The approval of a spot Ether ETF could also mark a shift in U.S. regulations. Recent political developments, such as the Senate vote overturning an SEC banking rule and the change in stance on crypto by former President Donald Trump, could influence the regulator’s decision. It is also expected that the approval of the ETF will lead to clearer regulatory classification for Ethereum, which will make institutional investors more comfortable investing in it.
If spot Ether ETFs are approved, it is unclear what the next big event in the crypto markets will be. Some believe that there may not be a direct successor event to look forward to. However, others believe that the approval could lead to new events and opportunities in the crypto industry, such as the emergence of competing and complimentary layer 1s, layer 2s, and sidechains, as well as the introduction of ETF products for other cryptocurrencies like XRP, Cardano, and Polkadot.