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What Does the Sudden Ethereum ETF Approval Mean for Crypto?

By Evan Jones06/10/2024

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Spot Bitcoin ETFs were always expected to be on the way, which is why it was no surprise when they were approved. But, spot Ethereum ETFs were expected to be denied by the SEC, with analysts estimating the odds of any sort of approval to be 25%. But then, in May, Eric Balchunas, a senior analyst at Bloomberg, raised those odds from 25% to 75%, which caused the price of ETH to jump 18%. 

It was a sudden flip in sentiment, with the SEC asking applicants to accelerate their 19b-4 filings. This includes giants like BlackRock, VanEck, and Grayscale, amongst others. But why the change of heart, and where does that leave crypto when it comes to mainstream adoption?

Ethereum ETF Not Trading… Yet

It’s worth noting that while the SEC is allowing financial institutions to file their 19b-4 forms, it doesn’t guarantee that they will approve the S-1 forms required to actually allow the financial instruments to be traded on the market. 

That said, it is expected that though it may not be that fast, the SEC will inevitably approve the S-1 forms bringing the spot ETH ETFs to market. But it seems like July may be when they’re approved as things seem to be accelerating quickly. 

If they are approved by July, that could quickly shake up the crypto market, especially assets within the Ethereum ecosystem including layer-2s and DeFi platforms. 

Election Issue?

The sudden acceleration of the spot ETH ETFs came not even a week after a bipartisan vote to repeal Staff Accounting Bulletin 121 (SAB 121). SAB 121 is the SEC’s controversial accounting guideline that critics argue deters investment banks from providing large-scale cryptocurrency custody services. 

US President Joe Biden then vetoed the repeal on June 1, which was unsurprising, as the White House had warned that repealing this policy could undermine the SEC’s ability to protect cryptocurrency investors.

This may have been somewhat surprising for those following the election, as it paints the democrat side as anti-crypto, with digital asset stances expected to be something that could swing votes. 

What it Could Mean for Crypto

If these spot ETH ETFs are approved, then it would likely be a boon for the crypto market, especially the entire Ethereum ecosystem. ETH ETFs being approved would mean the removal of their label as a security, which would improve investor sentiment, and reduce risk in investing. 

It would also likely mean that other digital assets are likely to be approved for spot ETFs, as approving ETH could open a floodgate of applications for other spot crypto ETFs. This could be a giant catalyst for the crypto market and adoption of cryptocurrencies. 

What Digital Assets Could Follow ETH for ETFs?

There is a fair amount of consensus in the community that the approval of spot ETH ETFs will mean other digital assets will soon follow with their own ETFs. 

Ripple (XRP) is one asset that has long-been in a battle with the SEC, but following the ETH application approval CEO Brad Garlinghouse said, ““I think it’s just a matter of time, and it’s inevitable there’s gonna be an XRP ETF, there’s gonna be a Solana ETF, there’s gonna be a Cardano ETF.”

It seems probable that other cryptocurrencies that are considered to be blue chip assets would be the next to get spot ETF approvals, though how fast these will come to market is anyone’s guess. 

Closing Thoughts

Ethereum ETF approvals are a big step for the cryptocurrency sector. It will be incredibly interesting to see what happens to the market when these ETFs are approved for trading. It will be doubly interesting to see what crypto assets follow in Ethereum’s footsteps, but it seems more certain than ever that crypto is becoming more and more legitimate.

Article tags

cryptocurrency
etf
ethereum
Evan Jones

Author

Evan entered the crypto scene in 2017, attracted to the many disruptive possibilities that blockchain could have on current world systems. He has a keen interest in decentralized services, payment processing, and viable NFT use cases such as event ticketing. He spends his days writing with his dog Kobe under his feet, if not on his lap.

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