SEC Approves Ethereum ETF Application, Crypto Market Welcomes New Milestone

On the morning of May 24th, the U.S. Securities and Exchange Commission (SEC) unexpectedly approved the 19 b-4 form application for the Ethereum spot ETF. This decision involves several well-known institutions, including some large asset management companies. Although the ETF issuers still need to wait for the S-1 registration statement to become effective before they can start trading, this is undoubtedly an important step for the crypto market to align with traditional finance.

The SEC has just begun discussions with issuers regarding the S-1 form, a process that may take several weeks. Market analysts expect that the approval process for the Ethereum spot ETF may be faster compared to the usual approval cycle of around 5 months for other ETFs. Currently, some issuers have quickly submitted revised S-1 application forms.

This approval is significant for Ethereum (ETH), the second largest cryptocurrency by market capitalization, marking further integration of the crypto market with traditional finance. Surprisingly, just a week ago, most people thought it unlikely that the SEC would approve these ETF applications.

The SEC's change in attitude has shocked the market. Previously, the SEC seemed to have little interest in Ethereum ETF applications, predicting that the market probability would drop to around 10%. However, the recent situation has taken a sharp turn. The SEC suddenly began dialogues with issuers, requiring the resubmission of the 19b-4 form, an action seen as having obvious political implications.

It is worth noting that several institutions have recently amended their ETF application content, removing the staking-related information. Some analysts believe that this may reflect the SEC's stance of balancing the fact that ETH itself is not a security, while staked ETH is a security.

The political factors of the U.S. election year may have accelerated the approval process for the Ethereum spot ETF. Recently, the U.S. government has sent positive signals to the crypto market, including the passage of the 21st Century Financial Innovation and Technology Act and the overturning of SAB 121 rules.

Nevertheless, market analysts expect that the appeal of the Ethereum ETF may be less than that of the Bitcoin ETF. Its asset size is expected to reach 10% to 15% of the Bitcoin ETF, approximately 5 billion to 8 billion dollars.

Looking back at the journey of Ethereum integrating into the traditional financial market, from the launch of Ether futures by the CME in February 2021, to major institutions beginning to apply for Ether ETFs in 2023, and then to Bitwise applying for a spot Ethereum ETF in March 2024 and providing correlation analysis, Ethereum is gradually moving towards the mainstream financial market.

Today, the SEC approved the Ethereum ETF application, marking a new phase for the crypto market. This not only reflects a shift in regulatory attitudes but also heralds further integration of crypto assets with traditional finance. Moving forward, the market will closely watch the official listing date of the ETF and its impact on the entire crypto ecosystem.