Updated May 24, 2024 - Economy

SEC approves ether ETFs, signaling change for crypto in the U.S.

Illustration of the Ethereum logo about to hit a line of binary coins in a Newton's cradle

Illustration: Sarah Grillo/Axios

Ether exchange-traded funds are on the way to listing on major stock exchanges, after the Securities and Exchange Commission greenlighted applications Thursday.

Why it matters: The ether ETF approval is being hailed as a symbolic victory for crypto — part of a larger unexpected softening on the U.S.'s regulatory stance.

Zoom in: Almost all of the issuers that launched spot bitcoin ETFs in January are in line to offer ether funds — Ark/21 Shares, Bitwise, BlackRock's iShares, Fidelity, Franklin Templeton, Grayscale, Invesco/Galaxy, Hashdex and VanEck.

Of note: It was approved under delegated authority. That is, by staff, with no vote by the commission.

Behind the scenes: Until earlier this week, most everyone was expecting a denial — the threat of enforcement action against a major Ethereum-based software developer and the unusual quiet around the ether ETF applications suggested "no" was inevitable.

The intrigue: Rumors swirled that the pivot had everything to do with politics.

  • The House passed major crypto legislation with support from a sizable block of Democrats, though the Biden administration had earlier in the day expressed opposition to the bill, while stopping short of threatening to veto it.
  • Last week, the House and Senate passed a resolution to overturn SEC guidance on how custodians should account for crypto, after the White House's notice that indicated the President's intention to veto that narrower bill.
  • Plus, former president and likely GOP candidate Donald Trump recently opened up for crypto donations.

A group of congressmen sent a letter earlier Thursday to SEC chair Gary Gensler pressing him to review other digital asset ETF applications under the same principles it approved spot bitcoin ETFs.

Reality check: The approval pertains to applications that exchanges submit for exemptive relief to list special types of ETFs, but issuers' S-1 filings, which contain prospectuses for their products, need to be declared effective before they launch trading.

  • An outstanding question that will matter to would-be ether ETF issuers is whether the SEC will socialize launches and line all of them up to launch at once, or whether it will handle applications first come, first served.

By the numbers: The price of ether jumped on the news to above $3,800.

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