On January 10, the United States Securities and Exchange Commission (SEC) gave its approval for 10 spot Bitcoin exchange-traded funds (ETFs), marking a significant moment in Bitcoin’s history. This decision allows investors in the U.S. to invest in Bitcoin-backed securities. The spot Bitcoin ETFs began trading on public exchanges the following day, January 11, and have since seen a significant influx of billions of dollars.
This approval of spot Bitcoin ETFs comes after years of rejections and has now shifted the focus to spot Ether ETF applications. The final deadline for the spot Ether ETF applications is in May. Just like with the spot Bitcoin ETF filings in 2023, major financial institutions such as BlackRock, ARK Invest, Fidelity, Invesco Galaxy, and others are filing for spot Ether ETFs. Ark was the first to file for a spot Ether ETF in September 2023, followed by BlackRock and others.
Similar to the multiple delays in deciding whether to approve spot BTC ETFs, the SEC has also postponed its decision on spot Ether ETFs several times. Although the seven Ether ETF applicants have different deadlines, there is a possibility that the SEC could issue its decision on all applications together, just like with the spot BTC ETFs.
As the final deadline approaches, there are divided opinions among ETF experts and the crypto community regarding the approval of a spot ETH ETF in 2024. Bloomberg ETF analyst James Seyffart believes that the SEC has already accepted Ether as a commodity when it approved Ethereum futures ETFs. Therefore, he believes it is only a matter of time before the SEC approves an Ether ETF. Senior Bloomberg analyst Eric Balchunas also shares this sentiment, giving a 70% chance of a spot Ether ETF being approved by May.
However, Morgan Creek Capital’s CEO Mark Yusko is less optimistic, giving less than 50% odds of a spot Ether ETF being approved in the U.S. in 2024. Yusko argues that the SEC remains generally hostile toward cryptocurrencies, as evidenced by the comments made by the agency’s Chair, Gary Gensler, on the day the Bitcoin ETFs were approved. Yusko also suggests that the SEC may still consider Ether a security, unlike Bitcoin, which is regarded as a commodity.
Despite the challenges with the SEC, many believe that a spot Ether ETF will eventually be approved in 2024. This belief stems from factors such as the parallel listing and regulation of Bitcoin and Ethereum futures, the growing participation of large traders in these assets, and the anticipation of continued market strength and institutional demand.
BlackRock played a significant role in the approval of spot BTC ETFs, as its entry into the BTC ETF race boosted confidence in the potential approval. BlackRock has a strong track record of 575 approvals to just one rejection. It remains to be seen whether BlackRock will maintain this record with the final decision deadline for spot Ether ETFs in May.
There is a potential roadblock for Ether’s spot ETF approval, which is Gensler’s view on the crypto market. Gensler has consistently stated that he believes all cryptocurrencies except Bitcoin are securities. This view raises concerns about the approval of other crypto-based ETFs, including Ether. Regulatory clarity and real-world results from the spot Bitcoin ETFs will likely be necessary for the approval of an Ether spot ETF.
In conclusion, the approval of spot Bitcoin ETFs has paved the way for potential spot Ether ETFs, but the final decision remains uncertain. The crypto community and ETF experts are divided on the outcome, with some optimistic about approval and others more skeptical due to regulatory challenges. The decisions made by the SEC and the views of Chair Gensler will play a crucial role in determining the fate of spot Ether ETFs.