Key Takeaways
- The price of ether surged over 20% on Tuesday before retracing some gains.
- Renewed hope for a spot ether exchange-traded fund (ETF) approval boosted crypto markets.
- SEC’s request for updated filings from exchanges contributed to the optimism.
Understanding the Optimism
The price of ether (ETH), the native cryptocurrency of the Ethereum network, saw a significant rally, climbing up to 20% early Tuesday. This surge was driven by growing expectations for the approval of spot ether exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC).
Reasons for Renewed Optimism
Following the successful launch of bitcoin (BTC) spot exchange-traded funds in January, the cryptocurrency community eagerly awaited a similar development for ether ETFs. However, concerns were raised by the U.S. regulator regarding ether’s classification as a security and issues related to staking. Despite these initial setbacks, recent actions by the SEC indicate progress in the application process.
The SEC’s request for expedited updates to the 19b-4 filings associated with spot ether ETFs from various exchanges, as reported by CoinDesk, mirrors steps taken during the bitcoin ETF approval process. Additionally, Fidelity’s decision to amend its ether ETF application by eliminating staking rewards is seen as a strategic move to address the SEC’s concerns about staking activities.
Implications of Fidelity’s Move
Staking allows ether holders to lock their tokens for network transaction validation and earn rewards. However, the SEC views staking as a securities offering and has taken legal action against exchanges offering staking services. Fidelity’s adjustment to its application is perceived as a step towards aligning with regulatory expectations and enhancing the prospects of an ether ETF approval.
This development has instilled confidence among investors and analysts, leading to revised odds of approval on prediction markets and positive sentiments in the market.
Future Outlook for Ether ETFs
While the SEC faces a deadline to decide on VanEck’s 19b-4 filing by Thursday, the process of approving S-1 initial registration filings and launching the first spot ether ETF could extend over several weeks or months. Despite potential delays, any progress in the approval process signals a positive trajectory for the introduction of spot ether ETFs.
Scott Johnsson, General Partner at Van Buren Capital, highlighted the significance of Fidelity’s staking removal in signaling the SEC’s stance on ether’s security status. This move, along with the unchanged commodity grantor trust structure, indicates a favorable outlook for ether ETF approval.
