Ethereum Etf approved on Wall Street. What changes now?

Late Thursday evening, with traditional markets now closed, the Securities exchange commission approved issuers' applications to list an Etf based on the spot price of Ethereum on Wall Street. The decision follows the approval of the Etf on Bitcoin last January. In some ways it was a white swan for the sector as few would have bet on an approval on the first available date (i.e. 23 January).

Traders were convinced of a postponement. Instead, at the beginning of the week, the regulator asked the houses on the waiting list (including Ark 21 Shares, VanEck, Fidelity and BlackRock) to enrich the request with additional documents and to 'waive' the 'staking' component on the ETF, a feature that allows interest to accrue to those who invest directly in the cryptocurrency and hold it over time (a sort of coupon or dividend).

Apart from the surprise effect - which was seen on the cryptocurrency market on Tuesday when the price of Ether jumped from 2,800 to 3,800 points in just a few hours - the news is important for the sector since after this decision Ether - the native token of the Ethereum blockchain - is considered, like Bitcoin, a commodity and not a security. A diatribe that had been going on for quite some time and which gives an idea of how difficult it is to classify cryptocurrencies using traditional schemes. "This decision brings at least a couple of key impacts to the market," explains Ophelia Snyder, co-founder and president of 21Shares. "First, it brings greater regulatory clarity on Eth's status in the United States and, at the same time, provides access to Ethereum through a secure and familiar structure for investors. Similar to what happened with the approval of Etf's on Bitcoin, this milestone also marks a significant professionalisation of the market structure for the underlying asset in the US."

From a financial point of view, the market's reaction was neutral, not least because the price had accelerated on the rumour of the previous days triggered precisely by the sudden request from the SEC led by Gary Gensler for further documents. Also because technically the game is not yet closed. The eight issuers in contention (Grayscale, BlackRock, VanEck, ARK 21Shares, Invesco, Fidelity and Franklin Templeton) will have to ensure that their S1 registration statements become effective. How long will this take? "For the moment it is difficult to answer this question. I can say that we will now begin the process of reviewing the S1s and we will be able to have a clearer idea following the forthcoming SEC statements,' Snyder points out. It is likely that this process will take a couple of weeks, but it is difficult to give a precise answer at this early stage."

It should be noted that an Ethereum futures has been listed for years, endorsed by the Commodity Futures Trading Commission. But there is an important difference between a futures and an Etf that replicates the spot price, i.e. the market price. In the latter case, issuers have to source collateral on the market and this in theory, in the event of positive net demand for the Etf, could increase the buying pressure on the underlying. A pattern already seen on Bitcoin, whose price rose from 40,000 to 70,000 in a few months after the Etf was approved and which recorded record net flows for a product of this type. Obviously, it is not certain that the same will happen for Ethereum, but experts in the sector consider the news to be positive in terms of reputation, the real Achilles heel of this industry still unknown to most.