Ethereum ETF

Finally it is here , a Bitcoin Spot ETF: A Milestone Achievement

It is not a matter of if, but of when an Ethereum ETF spot will be aproved by the SEC in the United States.

In a surprising turn of events, we now have a Bitcoin spot ETF, a development few of us anticipated in our professional journeys. The industry's focus is shifting towards gaining approval for an Ether (ETH) spot ETF as its next significant milestone. However, those expecting another decade of attention-grabbing headlines might find themselves disappointed.

Imminent Approval for ETH Spot ETF

The approval of an ETH spot ETF is not only considered secure but imminent. Unlike the U.S. Securities and Exchange Commission (SEC), which, for over a decade, made confusing statements in its various denials of Bitcoin's equivalent, it can no longer hide behind vague objections to what is evidently a presentation of a commodity ETP.

Hester Peirce's Insightful Critique

Commissioner Hester Peirce, in her condemnation of the SEC's behavior regarding this approval published on January 10th, pointed out that denials of these requests never made sense. Instead of adhering to a consistently clear process for these products, the regulator denied requests based solely on "prejudices" against Bitcoin (BTC) — biases that were only ultimately eliminated due to Greyscale's legal action.

Resultant Circus and Trust Erosion

The outcome, as noted by Peirce, has not only been the erosion of trust in the SEC but a "circus" surrounding these crypto products that wouldn't have occurred otherwise, a fact emphasized by the $1 billion now held in BlackRock's spot BTC ETF.

Distinct Situation for ETH ETF

A similar circus won't be witnessed around an Ether ETF. Currently, seven spot ETH ETF applications are on the SEC's desk. VanEck takes the lead, with a deadline set for May 23, 2024. While BlackRock's deadline is in August, even though one might expect the world's largest asset manager to dictate approval terms, the securities regulator has already initiated proceedings on VanEck's requests.

SEC's Challenge for Denial

The SEC would need a genuinely good reason for a denial, triggering a domino effect on other pending applications. This is why the market seems so confident that approval of an Ethereum backed ETF will be granted in May.

Wider Implications for Crypto-backed ETPs

This won't only be the result for an ETH product. The path is now clear for any type of crypto-backed or linked ETP, from spot products to more complex instruments like structured products, all linked to digital assets.


Remote Liquidity Challenge

As a very remote possibility, the only potential obstacle to an Ether spot ETF approval is liquidity. Just as market size and scale were concerns for a spot BTC product, it will be even more so for Ethereum, whose shift to proof of stake has further limited ETH supply.

Liquidity Issue and Potential Solutions

While BTC, now primarily a store of value, can stay long-term within large investment funds, Ethereum is a working currency used to pay an increasing number of transactions on the highly composable chain. This, and only this, might be a hurdle for the world's second-largest cryptocurrency regarding spot ETF approval, but it's genuinely a remote possibility. In fact, the same argument could apply to stocks and never does.

Persisting Liquidity Challenge

The liquidity issue will continue to impact almost all markets as these mega ETP funds absorb assets from the savings of an aging global population, and solutions will continue to be found. In fact, at this moment, we see a lot of Bitcoin flowing into Coinbase wallets, likely whales making over-the-counter (OTC) deals to meet institutional demand.

ETH as a Value and the ETF Transition

The question of whether ETH is a security is null and void since, once it becomes an ETF, it becomes a security. And we already have commodity ETFs, many of them.

Reason for Bitcoin ETF Approval Delay

The reason it took 10 years to approve a Bitcoin ETF was politics, plain and simple. The SEC wasn't sure or ready to be sure until asset managers were sure and ready to be sure this new asset class should be allowed through the door. Now, we have clarity.

Cryptocurrencies' Entry into Traditional Finance

With the approval of the spot BTC ETF, cryptocurrencies have not only crossed the sacred door of TradFi but are firmly seated at its table. Now, more than the approval of an ETH spot ETF, we can brace ourselves for the large-scale institutional colonization of the cryptocurrency industry.


In conclusion, this is an exciting time to be involved in cryptocurrencies and especially for those holding Ethereum or considering buying in the current price dip.
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