SEC’s Unexpected Move Sparks Ethereum ETF Approval Speculation

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The cryptocurrency space is abuzz with speculation, as the United States Securities and Exchange Commission has asked Nasdaq and CBOE to update their applications for listing spot Ethereum ETFs. This unexpected move might hint that the SEC is on the verge of approving these filings.

SEC Calls for Accelerated Updates

On Monday, the SEC asked exchanges to fine-tune their 19b-4 filings for spot Ethereum ETFs. This order surprised many and has fueled speculation that the regulator may approve the applications ahead of key deadlines. The first round of spot Ether ETF deadlines includes VanEck’s application on May 23 and Ark Invest/21Shares’ on May 24. 

Eleanor Terrett reported, “Hearing issuers/exchanges have until 10:30 AM today to update the 19b-4 filings. Looks like staking was a no-go based on Fidelity’s update. Also hearing there has been *some* engagement on S-1s but unclear how substantive.”

Market Reactions and Price Surge

The SEC’s request has already influenced the market, with Ether’s price jumping as much as 18% on Monday and another 2.5% early Tuesday, to $3,764. These price movements reflect growing investor confidence in the potential approval of spot Ethereum ETFs. 

Reuters reported, “The U.S. securities regulator on Monday asked Nasdaq and CBOE to fine-tune their applications to list spot ether exchange-traded-funds (ETFs), signaling the agency may be poised to approve the filings, three people familiar with the process told Reuters.”

Analyst Perspectives

The request for updates from the SEC left many in shock, especially given the much-cautious attitude of SEC Chairman Gary Gensler towards cryptocurrency. However, the political landscape seems to be changing. As 

Jake Chervinsky wrote on X, “It’s hard to believe this SEC would do us any favors like approving the spot ETH ETF. But policy is politics, and crypto has been winning the political battle for months. Maybe the Biden camp saw how many voters Trump could win with one pro-crypto comment and decided to pivot.”

Zack Guzman defended Bloomberg analysts James Seyffart and Eric Balchunas against criticism for increasing the odds of ETF approval from 25% to 75% as justified based on developments. He outlined three key factors: bipartisan opposition to the SEC’s previous stances, lack of prior engagement between exchanges and the SEC, and ARK’s recent removal of staking from their ETF filing.

Standard Chartered’s Geoff Kendrick registered strong confidence in the approval, pegging the chances between 80% and 90% that the SEC will approve the ETFs this week. He estimated up to $45 billion in inflows for Ethereum in the first 12 months after an ETF was approved. “After approval, we estimate that spot ETFs will drive inflows of 2.39-9.15 million Ether in the first 12 months after approval,” Kendrick said.

Kendrick’s strong views extended into the price trajectory for Ethereum, projecting a year-end price target of $8,000 for ETH, given an expected $150,000 Bitcoin price at the end of 2024. He also projected that by the end of 2025, Ethereum may reach $14,000, given a Bitcoin price of $200,000.

Implications for the Crypto Market

The approval of spot Ethereum ETFs could have seismic implications for the cryptocurrency market. This would amount to a huge endorsement of Ethereum from U.S. regulators, more likely than not spurring strong inflows both from institutional and retail investors. Higher liquidity and legitimacy would mean the price of Ethereum would rise, taking other cryptocurrencies along with it.

As noted by Jesse Eckel, “Even if you don’t own any ETH you should care about this. Because when ETH goes up so will everything else. There will be a massive wealth effect that will spill into every corner of crypto. Solana, Avalanche, etc included. What’s good for ETH is good for all.”