- US Securities and Exchange Commission has given preliminary approval to applications from at least three asset managers to launch ETFs.
- Sources say the approval is contingent on the applicant submitting final issuance documents to the regulator by the end of the week.
OUR TAKE
The launch of a spot ETF that tracks the price of bitcoin is the culmination of a decade-long battle with the SEC. The SEC rejects these products because of concerns about market manipulation but later approveds the ETFs after losing a court case brought by digital asset manager Grayscale Investments, warning that the products were risky.
–Zora Lin, BTW reporter
What happened
BlackRock, VanEck and Franklin Templeton are among eight asset managers whose applications are likely to be approved by the Securities and Exchange Commission on July 22, with trading in the products expected to begin the following day, according to industry sources.
In late afternoon trading on Monday, Ether is trading at $3,433.07, up 7.1 percent on the day and up 14.4 percent for the week.
Martin Leinweber, digital asset product strategist at MarketVector Indexes, says he expects the new ether ETFs to see much less inflows and more price volatility because of its smaller market size and trading volume relative to bitcoin. Bitcoin reaches new highs after the ETF is approved.
According to CoinGecko, bitcoin’s market cap is just over $1 trillion, while ether’s market cap is $359 billion. While estimates of demand vary widely, Galaxy Research predicts that ETF products could attract $1 billion in monthly inflows. Thomas Perfumo, head of strategy at crypto exchange Kraken, says given ether’s smaller market size, inflows need not reach the level of bitcoin ETFs to be considered successful.
Also read: Bitcoin bull MicroStrategy offers 10-for-1 stock split
Also read: Ether set for a surge as new ETFs enter market
Why it’s important
If the application of eight asset managers is approved by the SEC, it will be a significant development for the cryptocurrency industry, marking Ether as the second mainstream cryptocurrency after bitcoin that can be opened up to a wider range of investors in the form of an ETF, increasing its market liquidity and transparency.
An Ethereum offering would mark another major victory for the cryptocurrency industry in pushing digital assets into the mainstream. Ether prices rose on the news, indicating that the market is optimistic about the possible positive impact of ETFs. It is expected that after the launch of the ETF, it may attract a large amount of capital inflows, and despite the small size of the ether market, its potential is still huge.
The launch of the bitcoin ETF has undergone a long period of scrutiny and controversy, and its final approval represents an important turning point in the regulatory recognition of the digital asset market, indicating a further improvement in the regulatory acceptance and market maturity of the cryptocurrency industry.
