Spot Ethereum ETFs Finally Approved for US Trading, Set to Launch on July 23

The United States Securities and Exchange Commission (SEC) has given the final green light for spot Ethereum exchange-traded funds (ETFs) to commence trading in the US on July 23.

This approval, granted on July 22, allows these funds to be listed on major stock exchanges such as Nasdaq, the New York Stock Exchange (NYSE), and the Chicago Board Options Exchange (CBOE).

Among the first issuers to receive approval for their spot Ether ETFs are prominent financial firms including BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy. This follows the SEC’s earlier decision on May 23 to approve their 19b-4 applications, facilitating a rule change that enables the listing and trading of spot Ether ETFs.

The newly approved iShares Ethereum Trust by BlackRock will be listed on Nasdaq, while the Grayscale Ethereum Trust will be available on the NYSE. Each ETF, excluding the Grayscale Ethereum Trust, will charge a base fee ranging from 0.15% to 0.25%. However, Fidelity, 21Shares, Bitwise, Franklin, and VanEck will waive fees for their ETFs for an initial period or until their products achieve a certain level of net assets. Similarly, the Grayscale Ethereum Mini Trust will waive fees for the first six months or until it reaches $2 billion in net assets, whichever comes first.

The approval of these spot Ether ETFs coincides with a significant political development: US President Joe Biden announced his withdrawal from the 2024 election race. This decision was seen as a positive signal for the crypto market.

Commenting on the matter, Richard Teng, CEO of Binance, explained, “the launch of ETH spot ETF trading in the US marks yet another significant milestone for Ethereum and the broader digital asset market. This development builds on the positive momentum we have witnessed in the digital asset market this year, further solidifying the legitimacy and accessibility of cryptocurrencies.

Much like the US Bitcoin ETFs that launched in January, this first wave of US Ethereum ETFs will provide more avenues to a broader range of investors to access the asset. The introduction of these ETFs addresses key concerns around legitimacy, regulatory compliance, security, and accessibility, making Ethereum a more attractive investment option.”

He continued, “While we anticipate a steady capital deployment into these ETFs, it is unlikely to be dramatic initially and will fluctuate based on various macroeconomic factors. However, I believe that the potential for ETF liquidity to grow exponentially is significant. With SEC approval and listing, these ETFs can now be invested in by institutions, which typically have a long-term investment horizon. This institutional involvement could provide a stable and substantial influx of capital over time.

It will be interesting to observe how the performance of ETH ETFs in their early days of trading compares to the initial performance of Bitcoin ETFs in the US. The reception of US Bitcoin ETFs has been overwhelmingly positive, recording an inflow of $4.7B on the first trading day. Interest remains high, with US Bitcoin ETFs having a cumulative total net inflows exceeding $16.59 billion as of July 17. Whether ETH ETFs will receive the same intensity of reception remains to be seen, but I am confident that this development will be overwhelmingly bullish for the whole digital asset industry.”

He concluded, “A recent survey by EY found that nearly all institutions (94%) believe in the long-term value of digital assets and/or blockchain technology, with 50% of respondents expressing interest to invest in tokenized assets. ETFs could serve as a gateway for investors who might not otherwise have exposure to Bitcoin and Ethereum. Over time, these investors may transition to directly accessing digital assets, thereby contributing to the market’s growth and maturation.”

On another note, eToro market analyst Josh Gilbert noted that Biden’s withdrawal could be beneficial for crypto assets, particularly if former President Donald Trump maintains his lead in election odds.

Industry experts anticipate that the spot Ether ETFs could capture between 10% to 20% of the investment flows that spot Bitcoin ETFs have attracted since their introduction over six months ago.

This development is yet another significant victory in the integration of digital assets into mainstream financial markets, potentially driving increased adoption and investment in the cryptocurrency sector.