The Impact of a Bitcoin ETF on an Ethereum ETF
According to Jag Kooner, Bitfinex’s Head of Derivatives, the approval of a Bitcoin ETF could affect the SEC’s view on an Ethereum ETF. This is because Ethereum is classified as a security or commodity. After the launch of the first Bitcoin ETF, Ethereum ETFs quickly emerged in other regions, such as Canada, where regulators were comfortable with the product due to the presence of a regulated futures market for ETH. This created a favorable environment for risk management.
Ethereum’s Path to ETF Approval
Kooner also noted that SEC chairman Gary Gensler sees cryptocurrencies other than Bitcoin as securities. However, Bloomberg analyst James Seyffart believes that the SEC considers Ethereum a commodity, given the acceptance of Ethereum futures-based ETFs. The entry of financial entities like BlackRock into the Bitcoin ETF space indicates a positive trajectory for crypto ETFs, potentially extending to Ethereum ETFs. Yet, initial attempts to convert Ethereum trusts into ETFs faced pushback from the SEC, highlighting the importance of Ether’s categorization.
“ETFs serve the purpose of bridging traditional finance US investors and traders with crypto. This may not be true for other crypto assets that have not established themselves as ‘digital gold’ or a commodity. For example, futures-based Ethereum ETFs had lackluster performance compared to futures-based Bitcoin ETFs.”
When Can We Expect a Spot Ethereum ETF?
TD Cowen’s Washington Research Group has outlined a timeline for the potential approval of a spot Ethereum ETF in the US. They target late 2025 or early 2026 for approval. Previous speculation suggested approval could come after the November 2024 elections, but TD Cowen now anticipates a delay. The SEC is unlikely to approve an Ether-focused fund in 2024 due to political factors and potential backlash from progressive Democrats following the approval of a spot Bitcoin ETF.
Hot Take: The Future of Ethereum ETFs
The approval of a Bitcoin ETF has sparked interest in the possibility of an Ethereum ETF. While there are challenges, such as Ether’s classification and regulatory considerations, the success of spot Bitcoin ETFs indicates a potential path for Ethereum. As institutional participation and market validation increase, the likelihood of an Ethereum ETF approval grows. However, it may take some time before a spot Ethereum ETF becomes a reality in the US.
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