SEC approves spot Ethereum ETFs after shocking U-turn

The US Securities & Exchange Commission (SEC) approved 19b-4s filings of spot ETH ETFs on Thursday after several weeks of silence towards issuers.

Also read: Ethereum on the brink of 75% rally as SEC approves ETH ETFs

SEC approves spot ETH ETF amended filings

The SEC's Division of Trading & Markets approved 19b-4s filings of spot ETH ETFs on Thursday after asking exchanges to submit amended filings on Monday. The approval comes after weeks of silence from the SEC towards ETF applications. A total of eight filings fom applicants was approved including Van Eck, Bitwise, BlackRock, Grayscale, Invesco Galaxy, Ark 21Shares, Fidelity and Franklin Templeton.

The SEC would also have to approve S-1s applications — which may take some weeks — before the ETFs officially launch.

"TO BE CLEAR: This does not mean they will begin trading tomorrow. This is just 19b-4 approval. Also needs to be an approval on the S-1 documents which is going to take time. We’re expecting it to take a couple weeks but could take longer. Should know more within a week or so!," said James Seyffart. "Typically this process takes months. Like up to 5 months in some examples but @EricBalchunas and I think this will be at least somewhat accelerated. Bitcoin ETFs were at least 90 days," he added.

Read more: As Ethereum spot ETF approval nears, these altcoins could explode

After the SEC approved spot Bitcoin ETFs in January, many expected the agency also to greenlight applications for spot ETH ETFs. However, the SEC reportedly refused to engage with issuers, postponing applications on several occasions. Unlike its approach with spot Bitcoin ETFs, where it was in constant contact with issuers, the SEC's silence led many to believe it wouldn't approve spot ETH ETFs. As a result, Bloomberg analysts Eric Balchunas and James Seyffart tagged approval odds of the ETFs at 25%.

In addition, Ethereum infrastructure provider Consensys court filings showed that the SEC was considering declaring ETH as a security after launching investigations into Ethereum-related firms.

However, the SEC surprisingly began engaging with issuers on Monday, asking exchanges to submit amended 19b-4s filings. As a result, Balchunas and Seyffart increased their approval odds to 75%, terming the move as largely political and possibly spurred by US President Joe Biden after Presidential candidate Donald Trump's pro-crypto speech.

What the Ethereum ETF approval mean for investors

Considering Bitcoin's run to a new all-time high and the general market rally following its ETF approval in January, several experts predict spot ETH ETF will have a similar effect. Specifically, many expect DeFi tokens to be among the largest gainers alongside Ethereum in the next couple of weeks.

Matthew Sigel, Head of digital assets at Van Eck, predicts that yield across staking protocols would skyrocket as ETH leaves the ecosystem into these ETFs. However, this could also have security consequences for the broader Ethereum ecosystem.

Also read: Ethereum bulls await ETF approval as BlackRock, Bitwise, Grayscale submit amended ETH ETF filings

Some analysts have predicted that spot ETH ETFs inflows would be tiny compared to Bitcoin as most investors won't want to miss out on staking rewards. A recent analysis by CCData sheds light on this take:

"Hypothetically, if you had opened a 1000 ETH position on January 1st, 2023 with an ETF provider, instead of holding native Ether, which accrues staking rewards, you would have missed out on gains of over $200,000."

(This is a developing story and will be updated as we get more information.)