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SEC Clears Way for Ethereum ETFs to Boost Crypto
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The U.S. Securities and Exchange Commission has cleared the way for the potential launch of eight exchange-traded funds tied to the world’s second-largest digital currency, following the regulator’s approval of the first Bitcoin ETFs earlier this year.
The regulator Thursday rule changes approved in support of ETFs that invest in ether, the native cryptocurrency of the ethereum blockchain, for several groups including BlackRock, Fidelity, Invesco and Ark Invest. A second round of approvals will be required before the products can be launched.
Widespread anticipation of approvals has sent Ether Price Soars more than 20 percent since Monday and more than 60 percent since the beginning of the year.
This is a significant regulatory shift for the SEC after months of silence on the issue. On Monday, the SEC abruptly gave notice to issuers and exchanges on pending applications, triggering a flurry of paperwork and revisions. The SEC had deadlines of Thursday and Friday to respond to VanEck’s and Ark’s Ether ETF applications, respectively, according to Bloomberg Intelligence data.
“This is a key step in providing access to Ethereum through the ETF structure, which will provide U.S. investors with easier access, better protection and safeguards,” Invesco and Galaxy, a digital asset group, said in a statement late Thursday. “We hope this approval signals a willingness by the SEC to approve the launch of these products.”
“I think most of us expected a disapproval order to come,” said Katherine Dowling, general counsel for Bitwise Asset Management, one of 11 U.S. bitcoin ETF issuers and which has filed to launch an ether ETF.
It is not yet clear if and when the SEC will grant the second round of approvals needed before the products can be launched.
SEC Chairman Gary Gensler explained his reluctance to allow cryptocurrency investment products to launch in the U.S. market Thursday morning at an Investment Company Institute conference. He alluded to the myriad fraud cases that have plagued the cryptocurrency industry, such as that of FTX founder Sam Bankman-Fried, who was fined $100,000 in March. 25 years in prison in connection with the billions of dollars that disappeared from its cryptocurrency exchange platform.
“This is all due to widespread disrespect for U.S. law,” Gensler told ICI CEO Eric Pan. “This is all due to fraud and scams. This is an area where some of the industry leaders are currently in jail, awaiting detention or extradition.”
Last year, the SEC lost a legal battle Grayscale Investments has announced its intention to convert its flagship Bitcoin fund into an ETF. Following this decision, the regulator, apparently reluctantly, decided to approved Grayscale’s Bitcoin product and 10 other new ETFs were launched earlier this year.