News
SEC Approves Spot-Ether ETFs in Crypto’s Latest Step
(Bloomberg) — Regulators have approved the first U.S. exchange-traded funds to invest directly in Ether, the world’s second-largest cryptocurrency, according to filings and statements from asset managers.
Bloomberg’s most read articles
21Shares AG, Bitwise Asset Management Inc., BlackRock Inc., Invesco Ltd., Franklin Templeton, Fidelity Investments and VanEck are among the issuers that have received approval from the U.S. Securities and Exchange Commission, according to filings released Monday. The SEC did not immediately respond to requests for comment.
The development paves the way for the imminent commercialization of ETFs and highlights an easing of the U.S. regulatory climate for the digital asset sector. Republican presidential candidate Donald Trump, currently leading in the polls, has also adopted a pro-crypto stance ahead of the November election.
“Our clients are increasingly interested in gaining exposure to digital assets through exchange-traded products (ETPs) that offer convenient access, liquidity and transparency,” Jay Jacobs, U.S. head of thematic and active ETFs at BlackRock, said in a statement.
Fee competition
In May, the SEC surprisingly pivoted to approving spot-Ether ETFs after reluctantly allowing Bitcoin funds following a reversal of a 2023 court ruling. Ether is the currency of the Ethereum blockchain, the most prominent network for crypto-based financial services. Several issuers, including BlackRock and Fidelity, are partially or fully waiving fees on Ether ETFs temporarily to attract assets.
Bitcoin ETFs have taken Wall Street by storm, attracting net inflows of about $17 billion since their launch in January. Commentators expect much more modest subscriptions for Ether funds.
For example, digital asset market maker Wintermute Trading Ltd. said typical analyst projections translate to anticipated annualized inflows of around $4.8 billion to $6.4 billion for Ether products in the first year.
“We believe actual demand could be lower, potentially between $3.2 billion and $4 billion,” the company wrote in a report.
Staking Challenge
Bitcoin ETFs have benefited from a controversial narrative that presents the market-leading token as digital gold, an interpretation that Ether lacks. Ether funds also won’t offer so-called staking rewards for maintaining the blockchain, a yield that can be leveraged by owning the token directly.
The story continues
While Bitcoin is considered a commodity, the SEC maintains that most other tokens are unregistered securities that should be subject to its oversight. Staking is a key issue because it raises questions about whether Ether should be treated as a security. SEC Chairman Gary Gensler has been ambiguous about Ether’s classification.
Bitcoin has surged 132% over the past year and hit a record high of nearly $74,000 in March. Ether has gained 88% over the past 12 months. Both were little changed Tuesday, trading hands at $67,530 and $3,475 respectively as of 11:45 a.m. in Singapore.
In late June, VanEck and 21Shares filed for an investment product in Solana, the fifth-largest cryptocurrency by market value, another attempt by ETF issuers to meet demand for digital assets.
–With the assistance of Vildana Hajric, Isabelle Lee and Lydia Beyoud.
(Updated with projection of entries from seventh paragraph.)
Bloomberg Businessweek’s Most Read Articles
©2024 Bloomberg LP