Regulation
Here’s Why ETH Has Changed Its Mind About Regulation
Ethereum prices fell yesterday but are stable at the time of writing. Today, July 23, nine Ethereum spot ETFs began trading on various regulated exchanges, primarily Cboe, Nasdaq, and NYSE.
This listing comes just two months after the U.S. Securities and Exchange Commission (SEC) reversed its decision and expedited the approval process of Forms 19b-4 filed by several players, including Black rock.
Spot ETFs Throw Out Gifts of Regulatory Clarity for ETH
With this historic milestone, Ethereum is the only cryptocurrency after Bitcoin to have received regulatory approval and a spot ETF approved by the otherwise strict regulator.
The derivatives listing is a win for Ethereum and its broader ecosystem, which includes a layer-2 solution network, a struggling non-fungible token (NFT) industry, and a resurgent decentralized finance (DeFi) landscape.
Bringing to X, an observer Notes that Ethereum is now primed for a perfect storm of bullish catalysts that will push the coin higher in the coming months.
Interestingly, while many proponents cite the expected influx of institutional capital into ETH via spot ETFs, the analyst believes that the regulatory clarity that accompanies this product represents a major boost to the price and growth of its ecosystem.
In a blog post, the analyst explained that these persistent headwinds, particularly resistance from the US SEC, have dampened gains.
With the spot ETF in play, these years-old headwinds that impede growth will effectively be transformed into tailwinds. This, in turn, ushers in a new era of unfettered adoption and investing, especially by Wall Street investors who primarily want regulatory clarity before exposure.
A New Era for Ethereum? The US SEC Is Still Silent
As a condition of approving Form 19b-4, the U.S. SEC barred issuers from staking investors’ ETH. Staking would allow issuers to receive rewards from the network if they locked up ETH, helping to secure the network. Instead, spot ETF issuers must secure ETH through regulated custodians.
This prerequisite has eased tension, allowing the regulator to approve all S-1 filings ahead of the products’ listing today. With these products available to investors, it effectively means an end to the regulatory uncertainty surrounding ETH, especially after the transition from a proof-of-work system to a proof-of-stake system in 2021.
Unlike the regulator’s stance on Bitcoin, which is considered a commodity, officials have yet to confirm whether ETH is a commodity. However, the United States Commodity Futures Trading Commission (CFTC) has repeatedly stated that not only Bitcoin and Ethereum are commodities, but other coins such as Litecoin also fall under the same umbrella.
Feature image from Canva, chart from TradingView