Bitcoin Breaks $57,000!More Wall Street Companies Prepare to Launch Crypto ETFs Next up is Ethereum

The listing of Bitcoin spot ETFs is expected to attract Wall Street institutions to flock to cryptocurrencies, and Ethereum spot ETFs may be next. Media reports say that at least 10 companies, including Fidelity Investments, have submitted applications to launch the first batch of U.S.-listed Ethereum spot ETFs, with institutions earning management fees.

Ethereum, a built-in token on the Ethereum blockchain, traded near $3,300 at one point on Tuesday for the first time since April 2022. This gives it a market capitalization of around $360 billion, compared to Bitcoin's market capitalization of more than $1 trillion.

The U.S. Securities and Exchange Commission (SEC) deadline to approve listing applications for these Ethereum spot ETFs is May this year, and the same decision is expected to be made on other similar applications at the same time. Opponents say that approving an Ethereum spot ETF could pave the way for the launch of more speculative crypto asset ETFs, which would expose investors to more risks they are not aware of, with experts noting that Ethereum's price is too volatile.

However, volatility and potential price manipulation are not unique to Ethereum: thousands of cryptocurrencies have sprung up over the years, and only about a dozen have reached a significant size. At the moment, the SEC has not made it clear whether it will approve or reject the Ethereum application. And since Wall Street applied for a spot bitcoin ETF to go public, several new factors are at play.

For years, the SEC has repeatedly rejected applications for spot bitcoin ETFs on the grounds that bitcoin is prone to fraud, and finally approved its listing only after a court order. The data shows that investors poured about $13 billion into nine of the spot bitcoin ETFs immediately after they were listed.

Some analysts have said that the approval of the Bitcoin spot ETF is likely to mean that the Ethereum spot ETF will also be approved. In approving Bitcoin spot ETFs, the SEC mentioned the high correlation between the price of Bitcoin and the price of Bitcoin futures. Ethereum is the only cryptocurrency other than Bitcoin that trades futures contracts on the CME, which is regulated by the Commodity Futures Trading Commission (CFTC).

The SEC allowed the launch of multiple Ethereum futures ETFs in October, but it didn't attract much interest.

In January this year, the agency also made significant changes to the details of how to manage such ETFs in the listing application of spot bitcoin ETFs, and this Ethereum spot ETF listing application also lists such details. Analysts say that these technical issues have been resolved and are another reason why the Ethereum spot ETF is expected to be approved, which is expected to be approved this year.

But there are also analysts who believe that the key differences between Ethereum and Bitcoin mean that approval is far from a foregone conclusion.

First, SEC Chairman Gary Gensler has consistently described Bitcoin as a commodity, but has not made it clear whether Ethereum is a security or a commodity. This distinction determines which authority regulates the asset and what regulations it is subject to.

Another potential obstacle is that owners of Ethereum can use their holdings and computing power to help the Ethereum network validate transactions, a process known as staking, which allows holders to earn interest on their assets. This is critical and has been on the SEC's radar. In February last year, the SEC ordered crypto exchange Kraken to stop offering staking services in the United States, and a few months later sued Coinbase Global for its staking program, saying it was an unregistered security.

Analysts believe that if the SEC approves the Ethereum spot ETF, it may make it conditional on a ban on staking.

The institutions that submitted the Ethereum ETF listing application have proposed different solutions to this problem. Grayscale Investments, a crypto asset management firm that applied to convert its $9.4 billion Ethereum trust into a spot ETF, said in a blog post that it would not offer staking services in the trust due to a lack of tax guidance and other risks.

In its application, Franklin Templeton said it may stake a portion of its Ethereum spot ETF assets through other companies and add the interest earned as income from the fund.

Analysts believe that if the SEC approves any Ethereum spot ETF applications, these ETFs are unlikely to be as popular as Bitcoin spot ETFs, but this is unlikely to deter Wall Street companies from offering these ETFs, as Bitcoin spot ETFs have already had huge initial success.

The data shows that since the launch of the Bitcoin spot ETF, it has attracted more than $6 billion in net inflows, while at the same time, the gold ETF has experienced a net outflow of nearly $3 billion. All this helped the price of Bitcoin surpass $57,000 on Tuesday for the first time since November 2021. This price increase has pushed Bitcoin's market cap to more than $1.1 trillion, surpassing Berkshire Hathaway and almost as big as Meta.

Overall, the total value of the cryptocurrency market has jumped to around $2 trillion for the first time in almost two years, backed by the rally fueled by Bitcoin ETFs.