(Kitco News) – In a late-breaking development on Thursday afternoon, the U.S. Securities and Exchange Commission (SEC) has approved the launch of spot Ethereum (ETH) ETFs on the U.S. market, providing a boost to crypto prices.
The potential launch of a spot crypto exchange-traded fund (ETF) has once again captivated the crypto community, this time with Ether taking center stage after the SEC made an about-face on the applications on their docket – requesting last-minute changes from issuers hoping to secure approval on Thursday.
And it wasn't just the crypto faithful that have been lobbying for approval as a bipartisan group of U.S. lawmakers – comprised of five members of the House Financial Services Committee, two Republicans and three Democrats – sent a letter to SEC Chair Gary Gensler urging the approval of spot Ether ETFs.
Citing the January approval of the first spot Bitcoin ETFs in the U.S., the group said the approval represents “a pivotal moment for both digital assets and our financial markets,” and suggested the approval of a spot Ether ETF is the next logical step.
The SEC’s “recognition of Bitcoin ETPs is a positive step and one in which we trust the Commission will continue for other digital asset ETPs,” the letter said. “We urge the Commission to maintain a consistent and equitable approach when reviewing upcoming applications for other digital asset-backed ETPs. Specifically, the Commission should apply the same principles set forth in the approval of the spot Bitcoin ETPs as it evaluates the pending Ether ETP applications as the legal considerations pertinent to Bitcoin also apply to Ether.”
“With the commission’s actions earlier this year, it seems a natural progression that would not only demonstrate consistency in the commission’s application of its standards but would also affirm the legal reasoning that facilitated the spot Bitcoin ETPs,” the lawmakers added.
“We encourage the Commission to continue enabling and embracing financial innovation while ensuring the full protection of the federal securities laws for investors,” the letter concluded.
It looks as though their pleas were heard – combined with Thursday being the final deadline to make a determination on several applications – as the SEC announced late on Thursday afternoon that spot Ethereum ETFs have been approved for accelerated launch, according to Bloomberg ETF analyst James Seyffart.
BOOM!! APPROVED! There it is. The SEC just approved spot #Ethereum ETFs. What a turn of events. It's really happening.
h/t @PhoenixTrades_ pic.twitter.com/KQ39mDyCbT— James Seyffart (@JSeyff) May 23, 2024
In the fast-moving world of crypto, analysts are always looking for the next story. Bloomberg Intelligence Senior ETF analyst Eric Balchunas said he found it “interesting” that the letter from the bipartisan group lawmakers said, “‘other digital assets’ vs only mentioning Ether.”
“Will be interesting to see how far and how quickly the ETF industry pushes [the] envelope (which is something its good at),” he said. “Wouldn't be surprised if they pounce on SEC vulnerability and file all kinds of coins (kinda like they have in Europe) to test the limits.”
Expanding on the surge in attention the crypto industry is getting in the wake of ETF launches, Balchunas said, “It's pretty surreal and fascinating to see ETFs get sucked into mainstream politics and an election year narrative… Just as I was trying my best to wind down all the attention I was giving crypto.”
“Once you’re in you’re here forever mate,” one user said in reply, to which Balchunas responded, “Crypto is the Hotel California of asset classes.”
As for what could come next for Ethereum’s price, economist Alex Krüger said the approval of a spot Ethe ETF could quickly send the top altcoin to new all-time highs (ATHs).
“If the ETF gets approved, which seems like it’s likely now, it’s kind of clear that with an ETF approval, we’re going to see all-time highs very, very soon,” he said during an interview on the Unchained 'Bits + Bips' podcast. “Because the market is not positioned for it. You were saying 25%. I would even think that the market had priced in almost like 0% probability or as close as it gets to no chance whatsoever.
“ETH has been one of the most hated coins, if not the most hated coin of this cycle, and it’s reflected in price,” he added. “ETH/BTC is like .052 BTC. So it does make sense for that to go all the way up to at least .070 BTC ($4,865) in the next couple of months. These things happen usually rather fast.”
Krüger said part of this prediction is based on what he sees as significant interest from institutions in allocating to an Ether ETF. “I think there’s a lot of demand out there,” he said.
And according to crypto asset trading firm QCP Capital, Ether’s price could increase more than 30% and spike to $6,000 following the approval of spot Ether ETFs. They used the performance of Bitcoin following its spot ETF approval as a proxy to determine this estimate.
At the time of writing, Ether trades at $3,790, an increase of 1.6% on the 24-hour chart.
