The SEC has officially introduced spot ETFs for Ethereum, the second-largest cryptocurrency by market value, and for their securities to be listed on the NASDAQ, NYSE, and CME exchanges.
ETFs enable the trading of underlying assets through shares. Spot ETFs, also known as spot exchange-traded funds, require buying an asset (such as a cryptocurrency) from the market to support the fund's shares.
Introducing these ETFs for Bitcoin in the US prompted a surge of funds into the market and played a key role in the cryptocurrency surge in 2024. The identical cluster of corporations, which counts financial giants such as BlackRock and Fidelity among its members, have been hoping for the authorization of Ethereum ETFs since the previous year.
Experts predict that new ETFs will be listed on exchanges within two weeks; however, some companies promptly submitted revised documents to the Commission.
The approval order
The Ethereum ETF approval process involved multiple steps, including a regulatory filing and a comment period.
NASDAQ, NYSE, and CME exchanges will include BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark Invest, Invesco, and Franklin Templeton funds. Nevertheless, ETF issuers must complete a registration process before commencing trading, as only Form 19b-4 received full approval.
After Form S-1 is approved, issuers can list exchanges for trading. Experts say it may still be a couple of weeks before this occurs. The complete introduction of spot Ether ETF trading is anticipated to result in a notable increase in institutional funds entering cryptocurrencies.
What’s next?
Similar to Bitcoin ETFs, Ethereum ETF issuers aim to attract investors with minimal fees. According to Bloomberg Intelligence, final fees for most products will be under 0.25%. Notably, at least five issuers are expected to waive commissions during the initial launch phase to enhance their appeal to potential investors.
There is one clear exception to the price war: Grayscale Investments will retain a 2.5% management fee for its conversion-derived Ethereum ETF. The company will create a mini-version with 10% of the larger ETF’s assets. This smaller sibling is expected to have the lowest fee of 0.15% when others run out of their grace period.
Grayscale also kept the management fee for its Bitcoin ETF at 1.5% in January, down from the original 2%, but still well above the competition. This decision will bring Grayscale $160 million in Bitcoin ETF fee revenue in 2024, the third-highest of any ETF in the US, and 2% of all US ETF revenue, according to Brian Armor, Director of Passive Strategy Research at Morningstar.
The new cryptocurrency product is unlikely to attract as many assets as Bitcoin ETFs, which have attracted more than $17 billion from investors since its launch.
Conclusion
The approval process for Ethereum ETFs was a multi-step process that included a regulatory filing and comment period.
BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark Invest, Invesco, and Franklin Templeton funds are now listed on the NASDAQ, NYSE, and CME exchanges. However, ETF issuers must register before trading, as only Form 19b-4 has been fully approved.
The next step will be the approval of Form S-1, after which issuers can list for trading on exchanges. According to experts, this can take several more weeks.
The full launch of spot Ether ETF trading will likely lead to a significant influx of institutional capital into cryptocurrencies.
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