By
Godfrey Benjamin
April 26th, 2024
The imminent approval of Bitcoin spot ETFs in the United States is expected to pave the way for more fund managers to apply for Ethereum spot ETFs in the near future.
The approval of several Ethereum (ETH) futures exchange-traded funds (ETFs) in the United States in October last year undeniably paved the way for spot ETFs in the near future. According to Bloomberg’s ETF and crypto analyst James Seyffart, the United States Securities and Exchange Commission (SEC) cleared the way for spot Ethereum’s ETF, having implicitly classified Ether as a commodity through its actions. Notably, crypto leaders in the United States are pushing for most digital assets to be classified as commodities in a bid to avoid the stiff regulations associated with securities.
“The CFTC is blatantly calling Ethereum a commodity. They do not call them securities. The SEC has approved Ethereum futures ETFs. So again, Gary Gensler will not explicitly say whether Ethereum is a security or a commodity, but in their action, by approving those Ethereum futures ETFs, they’re implicitly accepting those Ethereum futures as commodities futures,” Seyffart noted.
The Grayscale Investments’ court win against the US SEC on the spot Bitcoin ETF ruling has significantly changed the agency’s approach to the cryptocurrency industry. Consequently, should the US SEC approve the dozens of spot Bitcoin ETFs on Friday, the approval of Ether’s spot ETF will significantly increase. Moreover, the US political leaders want to get the attention of the 52 million plus Americans invested in cryptocurrencies by favoring policy changes. Additionally, Seyffart noted that the US SEC does not want to contradict its sister agency, the US Commodity Futures Trading Commission (CFTC), which has already signaled that Ethereum is a commodity.
“It wouldn’t just be the SEC going against the crypto industry. If they call Ethereum security, it’ll be going against their sister regulator, CFTC. That’s why I think we could see potential Ethereum ETFs approved this year as well,” the analyst added.
Market Implication on Ethereum and Price Action
The Ethereum ecosystem has grown to a mature network providing liquidity to the majority of web3 tokens. With a market cap of about $279 billion and a 24-hour trading volume of around $18 billion, the king of smart contracts has more room for growth in the coming years, fueled by institutional investors. In case the US SEC approves the dozen spot Bitcoin ETF applications, Ethereum’s price will rise in tandem with the flagship coin. Additionally, the Ether rise will even be more violent after the US SEC approves the Ethereum spot ETFs.
Moreover, Ethereum is a deflationary coin with high demand from all around the world. According to a recent report by CoinShares, Ethereum’s investment products registered a cash inflow of about $78 million in 2023, and the rate is anticipated to spike further in the coming years amid the crypto bullish sentiments.
