SEC Approves 8 Ethereum ETFs: Analysis of New Trends in US Encryption Regulation and Market Prospects

On May 23, the U.S. Securities and Exchange Commission (SEC) approved the applications for 8 Ethereum ETFs, which are planned to be listed on NASDAQ, NYSE Arca, and Cboe BZX. This move marks an important step towards the reality of spot Ether (ETH) exchange-traded funds, following the approval of Bitcoin ETFs in January this year. This article will briefly introduce the process of SEC approving Ethereum ETFs and analyze the latest trends in U.S. encryption regulation and the market opportunities it brings.

1. Review of the SEC Approval Process

Since the approval of the Bitcoin ETF, the fate of the Ethereum ETF has been closely watched. Unlike Bitcoin, Ethereum has no fixed total supply limit under the PoS mechanism, and its issuance is related to network activity. The SEC has previously expressed concerns that the high concentration of Ethereum holders may increase the risk of market manipulation, and the PoS mechanism may also lead to Ethereum being considered a security.

To alleviate the SEC's concerns, potential ETF issuers, including Fidelity and Franklin Templeton, have updated their application documents, promising not to stake ETH for profit. This move effectively reduces the risk of Ethereum being regarded as a security.

On May 23, the SEC approved the applications for 8 Ethereum ETFs. However, these ETFs have not yet received trading permission. The SEC approved the related 19b-4 forms, but ETF issuers must wait for the S-1 registration statement to become effective before they can start trading.

In addition to the 8 approved ETFs, there are 6 Ethereum spot ETFs waiting for approval, and resolutions are expected to be made in the coming months.

2. New Developments in U.S. Encryption Regulatory Policies

The approval of this Ethereum ETF reflects, to some extent, a shift in the attitude of U.S. regulators towards cryptocurrency policy. The SEC seems to be starting to distinguish between the nature of ETH itself as a cryptocurrency and products or services derived from staking ETH. This attitude resonates with the recently passed "Financial Innovation and Technology Act of the 21st Century" (FIT21).

The FIT21 Act clearly defines which digital assets are regulated by the Commodity Futures Trading Commission (CFTC) and which are regulated by the Securities and Exchange Commission (SEC). The Act aims to distinguish between cryptocurrency assets that are considered commodities and those that have securities attributes, and to establish an appropriate regulatory framework.

The approval of the Ethereum ETF and the passage of the FIT21 Act mark a significant shift in the regulatory landscape for cryptocurrency in the United States. The SEC is attempting to seek a balance in Ethereum regulation, distinguishing its nature as a digital currency from potential securitized products or services.

3. Opportunities for Development Brought by the Cryptocurrency Market

The approval of the Ethereum ETF has had a significant impact on the market. Data shows that after the announcement, the price of Ether rose by 20% within a day, and briefly surpassed $3800. In the past 12 hours, the total liquidation across the network reached $319 million, with $122 million in ETH liquidations.

Cryptocurrency traders indicate that if long-term indicators continue to improve, Ethereum may once again challenge the $5,000 price point. Some bank researchers expect that once approved, a spot Ethereum ETF could attract between $15 billion and $45 billion in capital inflows in its first year.

The inclusion of Ethereum in a spot ETF means that investors can gain exposure to Ethereum by purchasing ETF shares without the need to directly hold or manage encryption. This will provide a channel for a wider range of investors to participate in the crypto asset market, with the potential to increase market liquidity and enhance price stability.

In addition, the launch of the Ethereum ETF could have a positive impact on the entire altcoin market, as most altcoin trading pairs on decentralized exchanges (DEX) are against Ether. The rise in Ether's price may lead to a passive increase in these altcoins.

The introduction of ETFs may also enhance investor confidence, bringing broader recognition and participation to the encryption industry. In the future, spot ETFs for other digital assets may gradually emerge, making cryptocurrency assets a new asset class that is accepted as an investable trading variety by more ordinary investors.