What will happen after the Ethereum spot ETF is approved? What industry insiders say

Author: Ezra Reguerra, CoinTelegraph; Compiler: Baishui, Golden Finance

After the Ethereum spot exchange-traded fund (ETF) was approved, experts discussed the progress at the X Spaces conference.

On May 23, the U.S. Securities and Exchange Commission (SEC) approved the 19b-4 applications of Ethereum ETF applicants, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy and Bitwise.

After the Ethereum ETF was approved, Cointelegraph Editor-in-Chief Gareth Jenkinson hosted an X space with Bloomberg analyst Eric Balchunas, VanEck Digital Asset Research Director Matthew Sigel, Consensys Global Regulatory Affairs Director Bill Hughes and Animoca Brands co-founder Yat Siu.

What happens after the Ethereum ETF spot is approved?

After the spot Ethereum ETF is approved, Balchunas expects a similar situation to the spot Bitcoin ETF. The analyst described it as a “copy horse race” where issuers will launch on the same day.

Despite the possible similarities to the spot Bitcoin ETF, Balchunas believes that Ethereum ETFs are likely to see smaller volumes.

“I would look for a lot of similarities, but I would divide what you see with Bitcoin by 10 or so. So, you’d probably have $1 billion to $2 billion in volume in total in the first few weeks. I just don’t think that’s going to be very large.”

While the analyst doesn’t think a spot Ethereum ETF would be as large as a Bitcoin ETF, Balchunas said traders could make interesting moves. “You might see people short the ETF and buy Ethereum because you can collateralize it.”

Meanwhile, Sigel, who is working with one of the ETF issuers, said they will go out and make a “very strong investment case” for Ethereum. VanEck executives stressed that they have been working with the team to find the ideal combination of Bitcoin and Ethereum and will publish their analysis soon.

Sigel also said he believes there are a lot of tech and stock investors who are looking for assets with intrinsic value. The executive said these investors may not be aware of Ethereum and its "vibrant decentralized application (DApp) ecosystem".

The US doesn't want to play second fiddle

Mr Siu, who has worked with the Hong Kong government to promote Web3 in the special administrative region, said Hong Kong society can expect more development than the United States. Start competing in the cryptocurrency and Web3 fields.

On April 15, the Hong Kong Securities and Futures Commission (SFC) approved the first spot BTC and ETH ETFs.  With the US and Hong Kong approving spot Bitcoin and Ethereum ETFs, the executive believes that other jurisdictions may also start considering having their own crypto-based exchange-traded funds. He explained:

“Now that the U.S. has approved it, I think other countries around the world, whether it’s the U.K., Singapore, Japan or the Middle East, like Dubai, they’re going to think, ‘Okay, we need to have our own version of a spot ETF.’”

Siu believes that as jurisdictions around the world get involved in crypto ETFs, the U.S. doesn’t want to be left behind. “I think the U.S. certainly doesn’t want to be second fiddle to anybody.”

Because of this, the executive believes there will be more interesting developments as “sentiment shifts” in the U.S.

Ethereum as a Commodity

While the SEC didn’t explicitly state that Ethereum is a commodity, Hughes believes the spot ETF approval implicitly acknowledges it. However, the Consensys lawyer said the SEC should be transparent about the impact of its rulemaking. He explained:

“From our perspective, these rule amendments are troubling. We should be aboveboard and transparent about the impact of things like this, not just the rulemaking itself.”

Furthermore,ven though the ETF approval is seen as a win for cryptocurrencies, the lawyer remains skeptical about whether the SEC will take a more liberal stance on crypto-related matters in the future.

However, Hughes also said that the development could highlight “tensions in legal theories” that the SEC “improvises” to justify its enforcement actions.