After the successful launch of spot bitcoin exchange-traded funds (ETFs), which prompted the largest cryptocurrency in the world to soar 145% on an annual basis to reach a high point of $73,794, investors are now eyeing the potential approval of spot Ethereum ETFs.
Ethereum, coming right behind Bitcoin when it comes to market value, also seemingly benefited from spot bitcoin ETFs, as its price skyrocketed 95% year over year. The introduction of spot Ethereum ETFs has the potential to push the crypto markets even further up, as it could be argued that these launches might boost crypto's credibility as an asset even more. While the former was approved on January 11, some are skeptical about the possibility of the latter receiving the same treatment in the near future.
The United States Securities and Exchanges Commission (SEC) has already received some spot Ethereum ETF applications, and is currently in the process of reviewing them, with certain applications coming from BlackRock, Inc., Grayscale Investments, and Fidelity Investments, all of which already have spot bitcoin ETFs up and running. It is uncertain whether spot Ethereum ETFs will have as smooth of a sailing as their Bitcoin counterparts, as the SEC already put off deciding on these applications once, with the deadline now moved to May 23.
The main issue with Ethereum (ETH) is staking, which Bitcoin doesn’t allow. "When investors provide tokens to staking-as-a-service providers, they lose control of those tokens and take on risks associated with those platforms, with very little protection," the SEC previously said in a legal case against cryptocurrency exchange Kraken, which was forced to shut the service. Thus, this aspect of Ethereum could make it harder for the US agency to greenlight ETFs based on the token due to regulatory issues. What further complicates the situation is whether the SEC will push for Ethereum to be classified as a security rather than a commodity.
Meanwhile, some believe that delaying the approval of spot Ethereum ETFs would be beneficial. Bitwise Asset Management's Chief Investment Officer Matt Hougan previously told Forbes that these funds would be "more successful if they launch in 12 months than ... in May," as he thinks investors should be given time to “digest Bitcoin” first. On March 28, Bitwise also applied for a spot Ethereum ETF.
