The Securities and Exchange Commission (SEC) has approved a rule change that will allow for the creation of exchange-traded funds (ETFs) that buy and hold ether, the second largest cryptocurrency in the world. This decision comes after the successful approval of bitcoin ETFs earlier in the year, which have already seen significant inflows of over $12 billion.
Several companies that sponsor bitcoin ETFs, such as BlackRock, Bitwise, and Galaxy Digital, have also begun the process of launching ether funds. The approval of ether ETFs is seen as a positive sign for the cryptocurrency industry, indicating a potential softening of the SEC's stance towards digital assets.
The approval of the ether ETFs does not guarantee that all funds will launch, as the SEC's order only approves applications from various exchanges to list eight different ether funds. The order does not set a specific date for the ETFs to begin trading, and it is expected that the ether ETFs will be smaller initially compared to their bitcoin counterparts.
Ether, which powers the Ethereum network, is considered a blue chip coin along with bitcoin. While bitcoin is seen primarily as a long-term store of value, ether is viewed as an investment in early stage technology. The approval of ether ETFs may open up opportunities for investors to participate in the growth of the Ethereum network, including decentralized finance (DeFi) projects, nonfungible tokens (NFTs), and tokenization of real-world assets.
It is important to note that the approval of ether ETFs does not apply to other digital assets on the Ethereum network. The lack of staking opportunities in the ETF products may also impact their overall demand compared to bitcoin ETFs. Overall, the approval of ether ETFs marks a significant development in the cryptocurrency industry and may pave the way for further mainstream adoption of digital assets.