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Ethereum ETF Approval Hopes Rise as Bitcoin Funds Launch Successfully—Is an SEC Nod Around the Corner?

The debut of the first Bitcoin exchange-traded funds (ETFs) has ignited hope for the possible approval of an Ethereum ETF by the U.S. Securities and Exchange Commission (SEC).

This optimism follows the SEC’s recent approval, granted on Wednesday, for 11 Bitcoin spot ETFs. These newly launched Bitcoin funds attracted a substantial $2.5 billion in inflows on their first trading day, setting new records and demonstrating robust investor interest.

In light of this significant milestone for Bitcoin ETFs, attention is now turning to Ethereum, the second most valuable cryptocurrency, and the prospects of it gaining SEC approval for its own ETF. The market is keenly watching to see if Ethereum will follow in Bitcoin’s footsteps with an ETF offering.

ETH Spikes on Bitcoin ETF Launch

Following the news of the Bitcoin ETFs, there has been a surge in optimism, pushing Ethereum’s value to its highest since May 2022. This optimism is driven by the anticipation that an Ethereum ETF might also become a reality. Currently, applications for spot Ethereum (ETH) ETFs are pending before the SEC, with decisions expected to start coming in as early as May 2024. Major financial firms, including BlackRock, Fidelity, Invesco, Ark, and VanEck, have submitted applications seeking approval for Ethereum ETFs.

However, comments from SEC Chair Gary Gensler have introduced some uncertainty regarding these prospects. After the approval of the Bitcoin funds, Gensler pointed out that these were for a “non-security commodity” and clarified that this decision should not be interpreted as a readiness to approve ETFs for other cryptocurrencies.

Gensler stated, “Importantly, today’s Commission action is cabined to ETPs holding one non-security commodity, bitcoin. It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.” He made these remarks following the SEC’s decision on Bitcoin ETFs.

This distinction is crucial because the SEC generally views most cryptocurrencies as securities, in contrast to Bitcoin, which is classified as a commodity. Ethereum, seen by the SEC as a security, may therefore face more significant challenges in its path to ETF approval.

Experts Divided on Ethereum ETF Approval Odds

There are varied opinions within the industry about the possibility of an Ethereum ETF receiving approval this year, reflecting the evolving attitude of the SEC towards cryptocurrency investment vehicles.

Antoni Trenchev, co-founder of Nexo, encourages a focus on the SEC’s actions rather than its statements. Speaking to CNBC, he said, “I’d watch what the SEC does and not what it says, because it wasn’t long ago that the prospect of a spot Bitcoin ETF seemed like a distant dream.” Trenchev believes that the fast-paced nature of the crypto world means that investors are anticipating what could be the next major spot ETF approval.

On the other hand, some are skeptical about a swift approval for an Ethereum ETF, especially in light of recent cautions from SEC Chair Gary Gensler. Anthony Scaramucci, founder of SkyBridge Capital, expressed his view that while Gensler is in charge, quick approval seems less likely, but he remains optimistic about Ethereum’s future in the long run. “He’ll probably block ETH. But that doesn’t mean ETH isn’t coming. I think it just requires patience. It may be early on that trade, but ETH is here to stay as well,” Scaramucci said.

Currently, the Bitcoin ETF approvals indicate that the SEC is gradually warming up to the idea of mainstream cryptocurrency investment vehicles. However, the agency’s cautious approach, particularly regarding Ethereum, suggests a measured and deliberate strategy.

The question remains: could increasing industry pressure and growing investor interest speed up the approval process for an Ethereum ETF? With the precedent set by the Bitcoin ETFs, Wall Street and the broader financial community are keenly observing for any indications of progress towards an Ethereum fund.

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