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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 ether, paving the way for the products to begin trading later this year.

ETF issuers must also seek approval before launching their products, but Thursday’s approval is a surprising victory for the companies and the cryptocurrency industry, which had expected the SEC to reject their filings by Monday.

Nine issuers including VanEck, ARK Investments/21Shares and BlackRock are set to launch ETFs linked to the second-largest cryptocurrency after the SEC approved a Bitcoin ETF in January in a watershed moment for the industry. I hope so.

“This is a very exciting moment for the industry as a whole,” said Andrew Jacobson, vice president and head of legal affairs at 21Shares, calling it a “significant step” toward product trading.

Thursday was the deadline for the SEC to decide whether to file VanEck. Market participants were bracing for a rejection because the SEC did not participate in the application.

But surprisingly, SEC officials asked exchanges on Monday to quickly fine-tune their filings, leaving the industry scrambling to complete weeks of work in just a few days, the people said.

Reuters could not confirm why the SEC changed its mind.

“The introduction of a spot Bitcoin ETF has already demonstrated significant benefits to the digital asset and ETF space, and we believe a spot Ether ETF will similarly provide protection for U.S. investors,” said Rob Marrocco, global head of ETP listings at Cboe Global Markets. .” he said.

Nasdaq and NYSE declined to comment.

When reporters asked about the Ether ETF at an industry event earlier Thursday, SEC Chairman Gary Gensler, a cryptocurrency skeptic, declined to comment. An SEC spokesperson said in an email announcing the approval that the agency would have no further comment.

The exchange filing sought SEC approval for rule changes needed to list new products, but issuers still need SEC approval to approve ETF registration statements detailing investor disclosures before they can begin trading.

Unlike exchange filings, there is no set time period within which the SEC must rule on such statements. Industry officials said it was unclear how long it would take. Two sources familiar with the process said many issuers are ready to launch, but the SEC’s corporate finance division is likely to request changes and updates in the coming days and weeks.

The SEC rejected spot Bitcoin ETFs for more than a decade over concerns of market manipulation, but was forced to approve them after Grayscale Investments won a court victory last year.

Sui Jeong, CEO of CF Benchmarks, an index provider for several Bitcoin and Ether ETFs, said Ethereum is more complex than Bitcoin and it could take months for the SEC to review the statement. But because Bitcoin ETFs offer an established template, there is only so much “slow rolling” the SEC can do, he said.

Investors including hedge funds, wealth advisors, and individual investors have invested more than $30 billion in cryptocurrency ETFs.

Thursday’s decision is another tailwind for the cryptocurrency industry’s efforts to break into mainstream finance. This week, UK regulators approved a listed cryptocurrency product and the US House of Representatives passed landmark legislation aimed at providing regulatory clarity for cryptocurrencies.

The bill still needs to pass the Senate, but its broad bipartisan support signals major support from the industry.

© Thomson Reuters 2024

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