Experts familiar with the process claim that Ether ETFs approval probably won’t happen in May, and it’s not easy to predict when it will happen. The news comes as a disappointment for those who were looking forward to this type of investment in the crypto world, but not as a surprise.
The decision comes a few weeks after Bitcoin ETFs are approved, and it will probably affect the market forces, the value and price of both of the largest cryptocurrencies.
What Do We Know So Far?
At this point, no one has come up with an official statement about the plans to create an ETF for Ethereum, and we’re in the realm of speculation. The SEC has decided under advisement, which is what they did for Bitcoin as well, and it took quite a long time.
What we do know is that the Hong Kong Stock Exchange approved the trade of both Bitcoin and Ethereum ETFs. That decision is significant, but it won’t affect the US exchange, and the US is now comfortable with being a bit behind on crypto when compared to other markets.
The State of the Ethereum Market
Ethereum has been the second-largest cryptocurrency for a while now, and it’s the best one when it comes to how it can be used for smart contracts. That’s why so many sites are used for gambling with cryptocurrencies, and those that require automated payments use Ethereum.
The use of smart contracts in traditional industries has been on the rise, and with it, the value of Ethereum has increased. Those interested in the broader state of crypto adoption can read more on this page as it’s an ongoing and deeply influential trend.
What Did Bitcoin ETF Do?
When Bitcoin ETFs were first announced, they were an important milestone for the industry, and they led to an increased interest in this type of investing. But soon after the initial hype, the inflow has somewhat stalled for Bitcoin ETFs. This is one of the reasons we may see a delay in Ethereum approval.
BlackRock’s IBIT attracted just $ 18.8 million on Thursday, down 93% from the monthly high of $308.8 million on April 5.
Since April 12, ETFs have witnessed a total net outflow of over $319 million, with Grayscale’s GBTC accounting for a large share of it. Grayscale has been experiencing problems since day one, mostly due to its strange fee structure.
“Key liquidity drivers, such as stablecoin growth and US-listed Bitcoin ETF inflows, have slowed down – as we have mentioned for several weeks. ETF flows peaked on March 12, and four consecutive days of net outflows have recently been seen. Demand for US-listed Bitcoin ETFs appears saturated, as even a 10-15% decline in Bitcoin prices has not increased net inflows,” Matrixport said in a market update.
Uniswap Lawsuit
The decision to allow ETH ETFs comes at an interesting time since the U.S. Securities and Exchange Commission has recently targeted decentralized finance for which Ethereum is most used. This has come in the form of a lawsuit against Uniswap, a decentralized crypto exchange.
The company received a notice from the U.S. Securities and Exchange Commission (SEC) that it intends to pursue an enforcement action. The main point of contention between the SEC and the exchange is about whether tokens are to be treated as securities or as a form of currency. If they are a security, then they are under the jurisdiction of the SEC.
The issue will have to be resolved by Congress, which will decide whether the SEC is the appropriate government agency to deal with crypto.
The Need for Overarching Regulation
Now that crypto ETFs are in the works and the traditional finance industry and the general public have adopted cryptocurrencies widely, there’s an end to an overarching regulatory move. At this point, the governmental agencies that work with stocks and bonds regulate crypto and crypto exchanges.
The EU has come up with a comprehensive and complex legal framework to deal with cryptocurrencies. As is oftenthecasewiththeEU, the law has taken years to hammer out, and it’s as complicated as it can be, but it’s now done, and the industry has something to point to when it comes to addressing concerns. Many claim that the US needs such a framework, too.
What Caused Bitcoin ETFs to Slow Down?
Bitcoin ETFs have slowed down, and it affects Ethereum bids as well, but some experts claim that the change has nothing to do with the validity of ETFs. Instead, it has more to do with macro reasons unrelated to the stock market or ETFs.
Source: Cosmo Politian