The U.S. Securities and Exchange Commission (SEC) on Thursday approved applications from Nasdaq, CBOE, and NYSE to list exchange-traded funds (ETFs) linked to the price of Ethereum.
The move potentially allows these products to start trading later this year. While the ETF issuers still need final approval before launching, Thursday's decision marked an unexpected victory for these firms and the cryptocurrency industry, which, until Monday, had anticipated the SEC would reject the filings.
In their comments on the development, TD Cowen analysts said they were “surprised at the timing, but not the outcome.”
“Approval has been inevitable for a few years. We do see this as clearing the way for more crypto ETFs though it does not represent a change in the SEC's approach to crypto. We still expect it will pursue litigation against tokens and trading platforms,” they added.
TD Cowen notes that the SEC's approval came about six months earlier than expected. The broker had anticipated the agency would wait a full year after the Bitcoin ETF launch before considering Ether ETF applications and could delay any litigation until early 2025.
However, the approval became inevitable after the SEC sanctioned crypto futures ETFs and subsequently the Bitcoin (BitfinexUSD) ETF earlier this year, making a legal challenge unlikely.
VanEck, BlackRock (NYSE:BLK), Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise are among the first batch of firms that secured the approval. They had to agree that Ether held in the ETFs would not be used for staking.
The next step is for the S-1 filings to be approved, which may take several weeks or longer, said TD Cowen’s team.
“That said, we do not see this as an insurmountable obstacle,” analysts wrote.
“Our view is that ETFs which reflect a basket of tokens will also be approved within a year though we will be watching if the initial baskets are just Ether and Bitcoin or if they include other tokens,” they added.