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Bitwise Joins Ethereum Spot ETF Race, Files Application with SEC

Crypto investment firm Bitwise has officially filed an application with the Securities and Exchange Commission (SEC) to establish a spot Ethereum exchange-traded fund (ETF). This strategic move places Bitwise among the contenders in the race to introduce the inaugural Ethereum spot ETF, following the recent successful launches of Bitcoin spot ETFs earlier this year.

As outlined in the S-1 registration form submitted by Bitwise, the proposed “Bitwise Ethereum Trust” aims to hold Ethereum and potentially partake in staking activities facilitated by trusted providers to garner additional rewards. Staking involves the process of locking up ETH to bolster the security of the Ethereum network and validate transactions, with participants earning newly minted ETH as incentives.

Interest in Spot Ethereum ETFs Surge

Bitwise’s entry into the Ethereum spot ETF arena mirrors the surging interest from traditional financial institutions in providing such investment vehicles.

In recent months, major players like BlackRock, Grayscale, and VanEck have joined the fray, submitting proposals to the SEC for their own Ethereum spot ETFs. This surge in applications underscores the growing demand for investment products that grant exposure to the second-largest cryptocurrency without necessitating investors to directly procure and safeguard it.

Bitwise’s submission follows closely on the heels of remarks from one of its executives, Matt Hougan, the Chief Investment Officer. Hougan had previously expressed skepticism regarding the approval of an Ethereum spot ETF during the summer, contrary to widespread anticipation. He suggested that a later launch, potentially in December, might offer more favorable conditions for spot Ethereum ETFs, affording traditional finance (TradFi) ample time to assimilate the recent Bitcoin ETF debuts.

The SEC has opted to postpone decisions on several prominent Ethereum spot ETF applications, including those from BlackRock, Grayscale, Fidelity, Invesco, and Galaxy Digital.

Initial forecasts, like those from James Seyffart of Bloomberg, initially projected delays until May 23, which marked the deadline for the earliest submissions from VanEck and Cathie Wood’s Ark Invest.

However, Seyffart has since shifted his stance, now anticipating these applications to be denied. “My cautiously optimistic outlook for ETH ETFs has changed in recent months,” he stated in a recent post on X. “We now anticipate these will ultimately face denial on May 23rd for this round. The SEC has shown limited engagement with issuers regarding Ethereum specifics, which stands in stark contrast to the situation with Bitcoin ETFs this past fall.”

Standard Chartered Says SEC Will Approve ETH ETFs by May

Despite the setbacks, some analysts remain upbeat about the outlook for Ethereum spot ETFs.

Standard Chartered, a leading British multinational bank, anticipates SEC approval for such products by May. They point to the SEC’s failure to classify ether as a security as a promising sign. Additionally, the bank forecasts that ETH’s price could soar to $8,000 by the end of 2024 and $14,000 by the close of 2025, partly driven by the anticipated approval of spot ETFs.

In the meantime, the Ethereum network has exceeded one million validators, with approximately 32 million Ether, valued at around $114 billion, staked within the network.

This 32 million ETH stake represents roughly 26% of the total supply, underscoring the significant commitment to Ethereum’s proof-of-stake (PoS) consensus mechanism.

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I want to save money. Will cryptocurrency work?

Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

Every cryptocurrency has two main components: the units of digital exchange called “coins” and the network within which the exchange takes place. These units can be transferred between wallets and exchanged on exchanges. The networks in which these coins exist are called blockchains, which translates to “chains of blocks.”

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