- The SEC is gearing up to approve the first Ethereum futures ETF, a significant stride for the crypto sector.
- Several firms, including ProShares, Volatility Shares, Bitwise, and Roundhill, are among the contenders seeking approval for these ETFs.
According to a recent report by Bloomberg, a pioneering move is on the horizon in the world of cryptocurrency. The US Securities and Exchange Commission (SEC) appears ready to authorize the very first exchange-traded funds (ETFs) rooted in Ethereum futures.
This prospective endorsement, a significant leap forward for the crypto community, has been keenly anticipated by numerous firms such as ProShares, Volatility Shares, Bitwise, and Roundhill. These firms have all submitted applications in hope of introducing their Ethereum-based ETFs to the market, CoinDesk added.
Past Stances and the Path Forward
Historically, the SEC has displayed reservations about directly associating ETFs with cryptocurrencies. Nonetheless, in the latter part of 2021, they initiated the allowance for trading funds connected to Bitcoin futures contracts, specifically those trading on the Chicago Mercantile Exchange. With this precedent, speculations have been rife regarding when Ethereum futures, which also see trading activity on the CME, would receive a similar nod.
While there’s undeniable excitement surrounding this potential SEC nod, the process hasn’t been without its delays. Bitcoin currently stands as the most valuable cryptocurrency with a market capitalization of approximately $512 billion. In comparison, Ethereum holds a value of about $195 billion, as per CoinGecko data.
SEC’s Concerns and Market Reactions
The SEC continues to exhibit caution regarding crypto-related ETFs. Their concerns are rooted in potential investor risks, price manipulations, liquidity challenges, and the extreme volatility of crypto prices, which could be daunting for individual investors.
Amidst this backdrop, some major players are not holding back. For instance, BlackRock Inc. recently made a move to file applications for ETFs directly based on Bitcoin. Following this filing in June, Bitcoin’s price surged past the $31,000 mark, although it spent a significant portion of the succeeding months in the neighborhood of $29,000. As of the recent updates, Bitcoin’s price hovers around $26,000, and Ethereum stands at $1,600, marking an 11% decline within the month.
As Ethereum’s ETF story evolves, many expect the cryptocurrency’s price to experience a notable surge. A successful approval of such an ETF would indubitably set a bullish tone for Ethereum in the market.
