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Late on Thursday evening, with traditional markets now closed, the Securities Exchange Commission approved issuers’ requests to list an ETF based on the spot price of Ethereum on Wall Street. The decision follows the approval of the Bitcoin ETF last January. In some ways it was a white swan for the sector given that few would have bet on an approval on the first available date (i.e. January 23rd).
The operators were convinced of a postponement. Instead, at the beginning of the week the regulator asked the houses on the waiting list (including Ark 21 Shares, VanEck, Fidelity and BlackRock) to enrich the request with further documents and to “waive” the “staking” component on the ETF, a feature that allows those who invest directly in the cryptocurrency to accrue interest and hold it over time (a sort of coupon or dividend).
Ether is considered a commodity, not a security
Apart from the surprise effect – which was seen on the cryptocurrency market on Tuesday when the price of Ether jumped from 2,800 to 3,800 points in a few hours – the news is important for the sector given that after this decision Ether – the native token of Ethereum blockchain – is considered, like Bitcoin, a raw material and not a security. A diatribe that has lasted for some time and which gives an idea of how difficult it is to classify cryptocurrencies using translational schemes.
From a financial point of view, the market reaction was neutral, also because the price acceleration was due to the rumor of the previous days triggered by the sudden request by the SEC led by Gary Gensler for further documents. Also because technically the game is not over yet. The eight issuers in the running – Grayscale, BlackRock, VanEck, ARK 21Shares, Invesco, Fidelity and Franklin Templeton – will need to have their S-1 registration statements take effect before listings can begin. There is no word yet on how long this will take. process, because it is speculated that it could take weeks.
The difference between futures and ETFs on Ethereum
It should be noted that a future on Ethereum has been listed for years, endorsed by the Commodity Futures Trading Commission. But there is an important difference between a future and an ETF that replicates the spot, i.e. market, price. In the second case, the issuers must find the collateral on the market and this in theory, in the event of a positive net demand for the ETF, could increase the purchasing pressure on the underlying. A pattern already seen on Bitcoin whose price rose from 40 thousand to 70 thousand in a few months after the approval of the ETF which recorded record net flows for a product of this type. Obviously it is not certain that the same will happen for Ethereum but industry experts consider the news in any case positive in terms of reputation, the real Achilles’ heel of this industry which is still little known by most.
