SEC IS Expected to Approve Ethereum ETF in May

  • February 5, 2024
  • Jennifer Moore
SEC IS Expected to Approve Ethereum ETF in May

Ethereum is the second most popular cryptocurrency after Bitcoin. A few weeks back, the Bitcoin ETF was approved by the SEC. Therefore, many experts are anticipating that soon Ethereum ETFs will also be approved. ETFs can be helpful for the original cryptocurrency Ethereum because it can seek, track, and outperform a particular index, commodity, sector, and other assets. In the United States, most ETFs including the newly approved Bitcoin ETF are subject to the 1940 Investment Company Act. Therefore, there are many associated advantages of having an ETF.

Possible Consequences of Approving Ethereum ETF

According to the Standard Chartered Bank, the SEC will approve ETFs from May 23. There is a fair chance that the SEC may follow the same strategy it used in approving Bitcoin ETFs. In the opinion of Geoffrey Kendrick, the ETH could reach as high as $4000, if the performance of ETH prices is similar to BTC prices prior to ETF approval. 

 The most important factor is the prevalent market sentiment. In the case of Bitcoin, the market sentiment was largely favorable for a long stretch of time. The same needs to be true for Ethereum, otherwise, the consequences of approval may not yield the desired results. 

Potential Advantages of Ethereum ETF

The advantages of Ethereum ETF will differ among prospective investors and traders. However, some potential advantages will be common to both. Investors can invest in spot Ethereum ETFs because they will automatically become more regulated and accessible. A spot Ethereum ETF will be the true owner of Ethereum, unlike futures-based ETFs. It will also benefit from more liquidity and better price stability. Moreover, there will be a higher sense of security among investors because tokens shall be stored in a digital wallet. The storage can minimize the risk of hacking. 

Convenience is another undeniable advantage that Ethereum users will reap, once SEC approves an ETF. This is because Ethereum ETF will have fewer barriers to entry in the crypto market. The investors will also feel relieved as they need not navigate online crypto exchanges or deal with public and private keys. 

Ethereum ETFs will have superior regulatory oversight, once the approval takes place. This will positively impact the perception of many investors. A clear set of standardized regulations may dispel the wrong conceptions about cryptocurrencies in general and Ethereum in particular. Therefore, transparency levels will increase and investors may feel more protected.

There is no doubt that once Ethereum ETF becomes a reality, then confusion regarding taxes will no longer arise. Users holding Ethereum through ETFs will have tax benefits. Investors can know the tax obligations better after the ETFs become the norm. 

Also Read- Bitcoin Mining as a Catalyst for Advancing the Shift to Renewable Energies

In Conclusion

The approval of Ethereum ETF by the SEC will be largely beneficial to the crypto users. This is because the overall pros of ETF will definitely outweigh the cons. Lower operational risks, potential tax rebates and benefits, direct ownership, and better liquidity can indeed transform the crypto market forever. However, the performance of Ethereum ETF will also depend on several external factors such as the prevalent economic conditions, and market sentiment.

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