General
Ethereum ETFs will start trading in the U.S. on July 23.
- As of now, the approval of Ethereum Exchange-Traded Funds (ETFs) is a reality! The United States Securities and Exchange Commission (SEC) has approved multiple Ethereum ETFs, with trading commencing on July 23, 2024. This significant development follows the successful launch of Bitcoin ETFs and marks a new milestone in the integration of digital assets into mainstream finance.
- Among the approved ETFs are those from prominent issuers such as BlackRock, VanEck, Franklin Templeton, Volatility Shares, Bitwise, Roundhill, ProShares, and Grayscale. This broad approval underscores the increasing acceptance and legitimacy of cryptocurrencies within the financial industry.
A complex process that ended well
- The journey to this approval was not straightforward. The SEC had delayed decisions on several applications, including postponing the decision on Galaxy’s Ethereum ETF until July. Despite these delays, the approval has now paved the way for regulated and broader access to Ethereum investments.
- With these ETFs now trading, investors can expect increased liquidity and a potentially larger influx of capital into the Ethereum market, further solidifying its position in the financial ecosystem.
- Major issuers like BlackRock, Fidelity, and Grayscale will waive fees for a limited time. The U.S. SEC approved the necessary S-1 filings on July 22, allowing Ether ETFs to list on exchanges such as Nasdaq, NYSE, and Cboe.
- BlackRock’s iShares Ethereum Trust will be listed on Nasdaq, and Grayscale’s Ethereum Trust on NYSE. Fee waivers will last until a set period or asset threshold is met.
What is an ETF?
- Similar to a BTC ETF, an ETH ETF allows investors to gain exposure to the Ethereum market through traditional exchanges. This enables regulated investment in ETH without the need to directly own the cryptocurrency, as is the case with other futures contracts.
Key points supporting this ETF approval
- Currently, companies like BlackRock adopt a relevant philosophy called Environmental, Social, and Governance (ESG), which emphasizes the importance of environmental, social, and governance considerations. In this context, Ethereum is favorably positioned as its technology and green energy production align with sustainable principles.
- Ethereum is distinguished as a productive asset, especially due to staking within its protocol. The fact that Ethereum holders can participate in staking and receive returns adds an attractive element to the cryptocurrency, representing an opportunity for investors.
- Over 20% of Ethereum is being staked within the network, reinforcing its security amidst the Proof-of-Stake algorithm the protocol possesses.
- The fact that Ethereum’s market capitalization is a third of Bitcoin’s suggests significant growth potential. This factor could be an attractive feature for investors.
- Concerning the “stock-to-flow“ concept, which evaluates production and demand, it stands out as a crucial factor. In comparison to Bitcoin, Ethereum exhibits an even higher stock-to-flow ratio, elevating its appeal as an asset.
In conclusion: this approval of Ethereum ETF broadens investor participation, enhance market legitimacy, and drive Ethereum’s value upward. Despite challenges, factors like sustainable technology, staking opportunities, and growing adoption, it marks a significant milestone in crypto markets.
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UPDATED as of July 23, 2024
