At least three out of eight asset managers looking to launch exchange traded funds (ETFs) tied to the spot price of the cryptocurrency, Ethereum, have received preliminary approval from the US Securities and Exchange Commission, according to Reuters, citing three sources.
Ethereum is the native cryptocurrency of the Ethereum blockchain, the world’s second most popular cryptocurrency. However, the corresponding ETFs are securities that allow investors to bet on multiple assets, reducing financial risk and exposure.
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The full approval requires applicants to submit the final offering documents to regulators before the end of the week, Reuters reported. It is understood that all eight will launch simultaneously.
The eight asset managers whose applications are likely to be greenlit by the SEC on 23 July include multinational investment companies BlackRock and Fidelity as well as crypto index fund manager Bitwise.
According to a report by Bitwise chief investment officer, Matt Hougan, Ether spot ETFs are expected to raise $15bn of net inflows in the first 18 months of trading.
The report also claimed that Ether spot ETFs will have a larger impact than they did for Bitcoin due to structural reasons, including Ether’s short-term inflation rate of zero percent.
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By GlobalDataIn January, nine US spot Bitcoin ETFs were launched, marking one of the most successful launches in the ETF market’s history.
The launch followed years of back-and-forth with the SEC, which had regularly rejected the products over concerns of market manipulation.
The combined market value of all cryptocurrencies reached an all-time high in
November 2021, briefly surpassing the $3trn mark, having previously crossed $1trn in January 2021 and $2trn in May of the same year, according to research and analysis company GlobalData’s Cryptocurrencies Thematic Intelligence 2023 report.
By the end of 2021, the market value had dipped to $2.2trn amid fears that the Federal Reserve would start raising interest rates.
In 2022, poor macroeconomic conditions caused the broader stock and
crypto markets to plummet. The decline in the crypto market was exacerbated by events like the collapse of Terra and the bankruptcy of FTX.
