SEC Approves Ethereum ETF Application, Crypto Market Welcomes Major Breakthrough

On May 24th at 5 AM Beijing time, the U.S. Securities and Exchange Commission (SEC) unexpectedly approved the application for the Ethereum ETF, a decision that shocked the entire crypto market.

Specifically, the SEC approved the 19 b-4 forms for the Ether spot ETF, which includes several well-known financial institutions. However, ETF issuers still need to wait for their S-1 registration statements to take effect before they can officially start trading. The SEC has just begun discussions with issuers regarding the S-1 forms, and this process may require multiple revisions, with the exact timeline still unclear. Analysts estimate it may take several weeks. Typically, ETF approvals take about 5 months, with Bitcoin ETFs taking at least 90 days, but the approval process for the Ether spot ETF is expected to be faster.

Currently, VanEck has taken the lead in submitting the revised S-1 application for an Ethereum spot ETF. Other potential issuers include several well-known financial institutions.

This approval marks a crucial step towards the listing of the Ethereum spot ETF, a milestone event for ETH as the second largest cryptocurrency, and an important juncture for the integration of the crypto market with traditional finance.

An analyst stated that a week ago he thought the idea of these ETFs being approved by the SEC was crazy. However, this "crazy" idea has now become a reality.

SEC's attitude has taken a sharp turn

This approval came after a sudden shift in the attitude of regulators. Earlier this year, after the approval of the spot Bitcoin ETF, the SEC seemed to have little communication with the Ethereum ETF issuers. Market expectations once dropped to around 10%.

Two weeks ago, an ETF analyst predicted that due to the lack of effective communication with potential issuers and the uncertainty of Ethereum's regulatory status, the SEC might reject the application for the Ethereum spot ETF on May 23. He even predicted that this ETF might not materialize until the end of 2025.

However, in recent days, the situation has dramatically changed. At the beginning of this week, the SEC suddenly began communicating with issuers, requesting that the 19b-4 forms be returned and resubmitted. This sudden shift seems to have taken some departments within the SEC by surprise. An informed source stated that this unprecedented situation indicates the presence of political factors behind it.

This Wednesday, several institutions amended their application documents, removing content related to staking. Some analysts believe this may indicate that the SEC is seeking a balance: recognizing that ETH itself is not a security, but the staked ETH may be. Additionally, the listing of some ETF applications on a certain trading platform's website is also seen as a positive signal.

The political factors of the U.S. election year may be an important force driving the approval of the Ethereum spot ETF, which also reflects a shift in the U.S. attitude towards crypto regulation. Recently, the U.S. government has sent unprecedented friendly signals to the crypto market. Congress passed a bill that will transfer regulatory authority over cryptocurrencies from the SEC to the more industry-friendly CFTC. At the same time, the Senate also overturned a rule that was unfavorable to the crypto industry.

This shift in attitude may have more far-reaching implications than the approval of the ETF itself.

However, it should be noted that the Ethereum ETF may struggle to achieve the same level of attraction as the Bitcoin ETF. Some analysts estimate that the Ethereum ETF could capture 10% to 15% of the assets of the Bitcoin ETF, amounting to approximately $5 billion to $8 billion, which would still be a decent achievement for a newly issued ETF.

The Journey of Ethereum Integrating into Traditional Financial Markets

Since the launch of Bitcoin futures by the Chicago Mercantile Exchange in 2017, the crypto market has begun to integrate with traditional financial markets. Here is the main timeline of Ethereum's entry into the traditional financial market:

In February 2021, the Chicago Mercantile Exchange launched Ether futures, allowing investors to hedge their Ether positions in the spot market.

In May 2023, several institutions submitted and withdrew applications for Ether futures ETFs.

In July/August 2023, the application for Ether futures ETF reappeared.

In August 2023, a cryptocurrency investment firm won a lawsuit against the SEC, paving the way for subsequent ETF approvals.

In September 2023, several institutions began applying for a spot Ether ETF.

In October 2023, six Ether futures ETFs began trading in the United States.

In March 2024, an asset management company applied for a spot Ether ETF, along with a correlation analysis.

In April 2024, a blockchain software company sued the SEC, claiming that it was attempting to regulate Ether as a security.

Now, with the SEC approving the Ethereum ETF application, its official listing and trading is just around the corner. This milestone event will further promote the integration of cryptocurrencies with traditional financial markets, bringing new development opportunities for Ethereum and the entire crypto ecosystem.