Spot ETH ETF trading launched today, SEC could reverse its course!

30 April 2024 14:17 UTC+2
| 4 min read

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The adoption of Bitcoin and Ethereum in traditional finance is gradually starting to become effective. This is especially the case with Hong Kong, which has decided to get ahead of the US by launching its Ethereum Spot ETF today.

Hong Kong Catches Up with the US and Launches ETH Spot ETFs Today

Hong Kong’s financial innovation is accelerating with the recent adoption of Spot Bitcoin and Ethereum ETFs, positioning the Asian metropolis as an emerging player in the cryptosphere.

The region whose ETF market is estimated 50 billion dollars according to the analyst Bloomberg’s Jack Wanghas introduced spot ETH and BTC ETFs that promise to catalyze its economy.

In total, there are 3 Chinese investment companies China Asset Management, Bosera Asset Management and Harvest Global Investments which is expected to launch crypto ETFs through its Hong Kong subsidiaries at Hong Kong Stock Exchange (HKEX) April 30th.

The launch of these spot ETH ETFs represents more than just an evolution of a financial product. It is a revolution that makes Hong Kong a pioneer in this field along with the United States.

In fact, Hong Kong Ethereum ETFs can hold cryptocurrencies directly, while those in the US still have to use indirect methods to gain exposure to Ether (ETH).

Zhu Haokang, the head of digital asset management at one of ChinaAMC’s ETF providers, even explains that the latter is unique because it offers shares listed in three currencies (HKD, USD, RMB) and unlisted shares.

Although the Hong Kong market is smaller than China’s, forecasts suggest so Hong Kong’s Crypto Spot ETF can accumulate up to US$1 billion in assets under management in two years at best.

This development in Hong Kong provides a stark contrast to the cautious US approach and illustrates how Asian markets can gain an edge in the global race for cryptocurrency mainstreaming.

Gary Gensler may refuse to approve ETH Spot ETFs in the US in May 2024

While spot ETH ETF trading begins in Hong Kong, the outlook looks less promising in the US under SEC Chairman Gary Gensler, known for his skepticism towards cryptocurrencies.

According to Reutersseveral internal sources indicate a pessimistic atmosphere after recent meetings with the US Financial Markets Authority where discussions seemed to lack depth usually given to large financial proposals.

In fact, well-known transmitters such as VanEck and ARK Investment Management, along with seven others have submitted applications for Ethereum Spot ETF approval since 2023.

With imminent deadlines set 23 and 24 May for VanEck and ARK respectively, the anticipation is palpable. However, SEC staff reportedly did not express significant interest or ask significant questions during discussions with issuers. A situation in stark contrast to the interaction prior to the approval of Bitcoin ETFs last January.

The potential rejection of spot ETH ETFs could represent a blow to the cryptosphere, which hoped to see the precedent of Bitcoin ETFs pave the way for other similar products and promote the integration of crypto into the traditional financial sector.

Despite issuers’ efforts to adapt Spot ETH ETF on ETFs based on already approved Ether futures contracts, the frosty reception from the SEC suggests a likely rejection. Likewise, since 2023, the institution has launched an investigation into Ethereum Foundation and even hopes to classify ETH as a security token.

All this surrounding pessimism around Ethereum is reflected in the markets, where despite a gain of 39% this year, crypto is struggling to keep up with Bitcoin. The SEC’s caution appears to dampen hopes for a quick approval.

Heading for future adoption of ETH Spot ETFs in the US?

Despite the current trend that seems to indicate a rejection of Ethereum Spot ETFs in the US, several elements suggest that their approval is only a matter of time.

In fact, just like with the Bitcoin Spot ETFs, players in the cryptocurrency market had to overcome legal challenges faced by the SEC before getting the green light. This fight shows that a persistent approach can pay off in the end.

In addition, the presence of some influential names among the applicants arouses remarkable optimism among crypto-enthusiasts. Among them, Black stone particularly stands out. This company, with an impressive history of 575 approvals out of 576 ETF applicationsstrengthens confidence in the possibility of a favorable outcome.

Blackrock’s sole rejection does not appear to deter investors, but rather to highlight the firm’s tenacity and expertise in the ETF space. Despite regulatory hurdles, history and the players involved point to a bright future for Ethereum Spot ETFs in the US.


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