Cryptocurrency - Handling with Ethereum-ETFs starts in the USA
After the US Securities and Exchange Commission (SEC) allowed trading of exchange-traded funds (ETFs) in the cryptocurrency Ethereum, trading of Ethereum-ETFs will begin without further delay. Five ETFs will be traded at the Chicago Board Options Exchange (CBOE), according to the options exchange. For the most famous cryptocurrency Bitcoin, ETFs have been approved since January. Since the beginning of the year, Bitcoin has gained over 50 percent in value against the US Dollar.
Ether is the second most important cryptocurrency. Transactions run on the Ethereum blockchain. Bitcoin was created as an alternative to traditional money and serves mainly as a digital store of value. Ethereum, however, is not just a cryptocurrency. It is an open-source platform for creating and executing digital contracts ("Smart Contracts") and decentralized applications. Legally speaking, Bitcoin is considered a commodity like gold.
Commodity or security?
The SEC, however, considered Ether more as a security, as market participants must deposit a certain amount of Ether as collateral and receive a type of dividend during the transaction validation process on the Ethereum blockchain, called "staking." To avoid regulatory issues, the fund companies have now committed not to use their Ether holdings for staking.
Experts expect medium- and long-term price increases due to Ethereum-ETFs, but the Ether price fell slightly after SEC approval and then turned around to gain roughly 2.5 percent in the morning. Since the beginning of the year, the Ether price has risen similarly strongly as Bitcoin - from $2353 on January 1 to currently $3514 ($49.4%).
Trading not allowed in Europe
Overall, the SEC has approved eight ETFs (Grayscale, Bitwise, Blackrock, VanEck, ARK 21Shares, Invesco Galaxy, Fidelity, and Franklin Templeton). Shares of these funds can be bought only by investors from the USA due to regulatory reasons. Trading is not allowed in Europe, as index funds with only one asset are not permitted. In the USA, these stock exchange-listed funds provide a way for investors to participate in the price development of Ether without directly investing in cryptocurrency. This is particularly interesting for institutional investors who are not allowed to make direct crypto investments.
CBOE Announcement [End of text]
- The approval of Ethereum-ETFs by the SEC marks a significant milestone for the cryptocurrency market, particularly in the United States of America.
- SECo, or the Chicago Board Options Exchange, will be the platform for trading five Ethereum-related ETFs, following the SEC's decision.
- The surge in Bitcoin's value against the US Dollar since the beginning of the year has attracted more attention to the world of digital currencies, including Ethereum.
- The use of Ethereum as a security, rather than a commodity, was a point of contention between the SEC and market participants, leading to the fund companies' commitment not to use Ether for staking.
- The rise of Ethereum-ETFs has sparked predictions of medium- and long-term price increases, although the Ether price initially dipped slightly after SEC approval.
- The SEC has approved a total of eight ETFs related to cryptocurrencies, with shares exclusively available to US investors due to regulatory restrictions in Europe.
- The impact of Ethereum-ETFs on the broader cryptocurrency market and the potential for international adoption of these digital assets remains a topic of interest and debate among financial experts.
- Traders and investors in the United States are closely following the developments in the cryptocurrency market, particularly in relation to Bitcoin and Ethereum, as the realm of digital currencies continues to evolve.
