The U.S. Securities and Exchange Commission has given the green light for exchange-traded funds that hold ether, the world’s second-largest cryptocurrency. Trading is expected to begin as soon as Tuesday. Several fund issuers submitted additional registration statements Monday afternoon, and exchanges have given notice that the funds will trade on Tuesday, indicating that the SEC has signed off on the funds. The regulator did not immediately respond to CNBC’s request for comment on Monday. It approved rule changes for exchanges to list ether funds in May.
Some of the companies that have been vying to launch ether funds include massive asset managers such as BlackRock, Fidelity, and VanEck. Crypto-focused firms such as Bitwise, 21Shares, and Grayscale are also jumping in. The ether ETFs come about six months after the launch of bitcoin ETFs, which saw some of the most successful debuts in the industry’s history. Combined, the funds have attracted more than $16 billion of net inflows, led by the iShares Bitcoin Trust (IBIT), according to FactSet.
The ether funds are not expected to be as popular as the bitcoin funds, in part because the total market for ether is roughly one-fourth the size of the leading cryptocurrencies. Still, the funds are expected to be large by the standards of most ETF launches. Bitwise Chief Investment Officer Matt Hougan has predicted the funds will attract $15 billion over their first year and a half on the market, with many investors holding both bitcoin and ether funds.
There are some funds on the market already that use ether futures contracts, but these new funds will be the first in the U.S. to buy and hold spot ether. This move is significant as it allows investors to have direct exposure to ether without relying on futures contracts.
Investor demand for bitcoin has been growing despite its stagnant price, indicating a strong interest in cryptocurrency assets. Bitcoin is also holding support and gearing up for another attempt at reaching a record high, according to market charts. Tom Lee, a prominent analyst, stands by his forecast of $150,000 for bitcoin and believes that the overhang from Mt. Gox will disappear in the second half of the year.
With the upcoming November election, a divided government would likely be the best outcome for the crypto market, according to TD Cowen. This scenario could provide stability and favorable conditions for the continued growth of digital assets.
