Four months after the approval of bitcoin ETFs, the SEC (Securities and Exchange Commission) has authorized the listing of ether ETFs on the NYSE and Nasdaq. This development marks a significant milestone for the cryptocurrency market, though fund managers are still waiting for final approval of their applications.
Major Market Capitalization
Ether, the second-largest cryptocurrency following bitcoin, boasts a market capitalization exceeding $450 billion, accounting for about 18% of the total cryptocurrency market value. Unlike bitcoin which has a capitalization of 1.4 trillion, ether’s blockchain operates on a different verification and governance system called staking. This process allows users to validate transactions by staking their ethers in exchange for returns, rather than mining cryptocurrencies.
Hurdles in ETF Issuance
While the SEC has approved the listing of eight ETFs holding ether, fund managers must still obtain approval for their S-1 forms before these products can officially launch. The regulator has not provided a specific timeline for this essential step.
Final approval of these ETFs could potentially make ether a significant component of retirement portfolios in the United States, enhancing its mainstream acceptance. However, the idea of including cryptocurrencies in retirement plans raises concerns about retirees investor security.
Leading Players
The contenders for issuing ether ETFs include Wall Street giants like BlackRock, Fidelity, and Franklin Templeton, as well as prominent cryptocurrency firms such as Grayscale, Bitwise, and Hashdex. Investor excitement over these ETFs recently caused the price of ether to surge by more than 20% in one week, though it saw a brief decline before stabilizing again.
A Growing Force
Ether has seen an increase of over 50% since the beginning of the year, outperforming bitcoin. The SEC’s announcement regarding the ETFs was largely anticipated by the market, contributing to the recent rise in ether’s price.
In summary, the authorization of ether ETFs represents a major step towards integrating cryptocurrencies into traditional investment portfolios. However, the wait for final approval from fund managers and the uncertainty regarding the impact of these new products on the market present both challenges and opportunities for investors.
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