Many spot Ether exchange-traded funds (ETFs) are set to begin trading on Tuesday, July 23, 2023, following final approval from the U.S. Securities and Exchange Commission (SEC).
Spot Ether ETFs Ready to Trade
The Ethereum network’s cryptocurrency, Ether (ETH), is the second-largest crypto by market cap. As of Monday evening, the SEC had cleared the following spot Ether ETFs for trading:
21Shares Core Ethereum ETF (CETH)
Bitwise Ethereum ETF (ETHW)
Fidelity Ethereum Fund (FETH)
Franklin Ethereum Trust (EZET)
Invesco Galaxy Ethereum ETF (QETH)
iShares Ethereum Trust ETF (ETHA)
VanEck Ethereum ETF (ETHV)
However, updated documents for Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) had not yet been released. Notably, Ether saw a 2% dip in trading on Monday.
Optimism Around Spot Ether ETFs
The launch of spot Bitcoin ETFs earlier this year significantly boosted Bitcoin (BTC) demand, pushing its price to record highs in March. According to Bloomberg Intelligence analyst James Seyffart, spot Ether ETFs are expected to attract 20% to 25% of the investment flows that Bitcoin ETFs did in their initial months. Bitwise Chief Investment Officer Matt Hougan predicts that Ether ETFs could drive prices above $5,000 and attract up to $15 billion in new assets over the next 18 months.
Questions Around Staking
The Ethereum blockchain operates on a proof-of-stake consensus mechanism, where Ether holders stake their tokens to validators, earning rewards in the process. The SEC has previously raised questions about whether Ether qualifies as a security, although it has not officially classified it as such. The Commodity Futures Trading Commission (CFTC) regards both Bitcoin and Ether as commodities.
The SEC has also scrutinized staking as a potential securities offering, recently suing ConsenSys for offering staked Ether through its MetaMask wallet. Consequently, none of the spot Ether ETFs will stake the Ether they hold, despite the potential for higher returns. SEC Commissioner Hester Peirce indicated that features like staking could be reconsidered in the future.
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