The U.S. Securities and Exchange Commission (SEC) has officially approved a spot Ethereum ETF, marking a significant milestone for the cryptocurrency market. The approval covers 19B-4 forms for eight applications, paving the way for these ETFs to eventually trade on stock markets. While the S-1 forms still require the SEC’s green light for trading to commence, the initial approval is a major step forward and has been positively received by investors.
SEC’s Approval Details
Previously, the SEC had expressed uncertainty regarding Ether’s status as a security. This stance was articulated in Wells Notices sent to various cryptocurrency companies. However, in a surprising reversal, the SEC has now granted initial approvals to all eight ETF applications, likely influenced by political considerations. The final S-1 form approvals are expected in the coming weeks.
Why the Change in Stance?
The SEC’s approval as Commodity-Based Trust Shares officially classifies the ETF as a commodity. The approval also acknowledges a 99% correlation between CME and spot ETH pricing. Each approved proposal aligns with existing guidelines for other Exchange-Traded Products (ETPs), ensuring transparency in pricing, asset portfolios, and oversight procedures.
Key Insights
– The SEC found the proposals consistent with the Exchange Act and rules for a national securities exchange.
– Approval was given as Commodity-Based Trust Shares, marking the ETF officially as a commodity.
– A 99% correlation between CME and spot ETH pricing was accepted.
– Each proposal aligns with other ETP guidelines, including pricing information, portfolio transparency, and oversight procedures.
– Commenters noted the need for approval due to the existing trade of CME ether futures ETFs and the lack of difference between spot bitcoin and ether ETPs.
The SEC justified its decision by pointing to strong investor demand for ETH ETFs, environmental benefits of Ethereum’s proof-of-stake mechanism, the potential for Trusts to stake Ether, and competitive disadvantages for U.S. innovation and investors if spot Ether ETPs were not approved. These factors led the Commission to conclude that the proposals meet the Exchange Act requirements, specifically Section 6(b)(5).
This approval, signed by J. Matthew DeLesDernier of the SEC, represents a historic moment in the ongoing evolution of the cryptocurrency market.