The US Securities and Exchange Commission has approved the first spot Ethereum exchange-traded funds (ETFs).
Trading for these ETFs began on July 23, 2024. This follows the successful launch of Bitcoin ETFs earlier this year, paving the way for increased institutional investment in Ethereum.
“While it was only a matter of time before the Ethereum ETF got the green light, this latest endorsement by the SEC is undoubtedly a significant moment for the industry and highlights the regulatory body’s changing attitude towards digital assets from outright rejection to reform,” says Philippe Bekhazi, Co-founder and CEO of XBTO.
Major financial institutions like Grayscale, Fidelity, Invesco, and Bitwise are set to launch these spot Ethereum ETFs. Unlike futures-based ETFs, spot ETFs directly track the price of Ethereum, offering a more straightforward investment option. This approval is expected to attract substantial inflows, boosting Ethereum’s investment appeal.
“Some are expecting a muted response compared to the Bitcoin ETF,” continues Bekhazi.
However, while Ethereum does have a different risk profile to Bitcoin, the Ethereum ETF could have the potential to become a key investment in any portfolio once the SEC and issuers take time to understand the asset.
"It’s fair to say that everyone will be closely watching the Ethereum ETF and underlying asset to see if it can follow in Bitcoin’s footsteps, breaking new all-time highs. However, it should also be remembered that, historically, market prices have experienced a correction following the initial ETF launch, which could also be expected following this approval."
“We’ve already seen how these assets can unlock a number of new investment possibilities for a much wider audience, including those who may not have previously had access to digital asset investment opportunities," says Bekhazi.
Institutions that have gained exposure to the spot Bitcoin ETF will likely seek to diversify with the Ethereum ETF, as it provides another familiar and comfortable vehicle for crypto investment.
“Not only will this help fuel inflows into the ETF but it marks another significant step forward for institutional adoption of crypto.”
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