The U.S. Securities and Exchange Commission (SEC) on 17 July 2024, approved multiplle Ether exchange-traded funds (ETFs), including Grayscale’s mini Ethereum ETF and ProShares’ Ethereum ETF. These funds are scheduled to begin trading next week, alongside other spot Ether ETF products.
Grayscale’s mini Ethereum ETF will utilize assets from its larger Ethereum ETF, making it more accessible and affordable. This move is part of Grayscale’s broader strategy to convert its existing Ethereum Trust into a spot Ethereum ETF. Currently, the Ethereum Trust operates like a closed-end fund, complicating the redemption of shares.
Back in May, the SEC surprised the market by approving proposals from BlackRock, Grayscale, and several other asset managers to launch spot Ethereum ETFs. This approval marks a significant milestone in the SEC’s evolving stance on cryptocurrency regulations.
James Seyffart, an ETF analyst at Bloomberg, indicated that the mini fund should mitigate expected outflows from Grayscale’s larger fund conversion. Grayscale expressed its excitement, stating: “Grayscale is excited to share that the SEC has approved Grayscale Ethereum Mini Trust’s Form 19b-4.” Seyffart predicted that the funds would commence trading next week on July 23.
Under the leadership of SEC Chairman Gary Gensler, the agency has maintained a strict regulatory approach towards cryptocurrencies, arguing that many digital assets should be regulated as securities. This stance has led to increased scrutiny and enforcement actions against various crypto companies and exchanges. Despite this, the SEC approved Bitcoin ETFs earlier in 2024, followed by Ethereum ETFs a few months later.
The approval of Ether ETFs is a significant development for the cryptocurrency market. It signals a growing acceptance of digital assets within traditional financial frameworks and provides a new level of legitimacy and accessibility for investors. The introduction of these ETFs is expected to enhance liquidity, attract institutional investors, and potentially stabilize the volatile crypto market. This move is seen as a positive step towards integrating cryptocurrencies into the broader financial ecosystem.
The SEC’s approval has sparked varied reactions. While some industry leaders and political figures have criticized Gensler’s regulatory approach, others see it as a necessary step towards creating a more secure and regulated crypto market. Entrepreneur Mark Cuban has called for Gensler’s removal, arguing that his approach creates an unclear regulatory environment for crypto companies. Some lawmakers have proposed bills to limit the SEC’s regulatory powers over crypto, favoring other agencies like the Commodity Futures Trading Commission (CFTC). However, these proposals face significant challenges in Congress.
