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Bitwise Files Application for Ethereum ETF
Cryptocurrency investment firm Bitwise has submitted an application to the Securities and Exchange Commission (SEC) to introduce a spot Ethereum Exchange-Traded Fund (ETF). This development places Bitwise in a competitive landscape alongside other companies striving to launch the first Ethereum spot ETF, following the successful deployment of Bitcoin spot ETFs earlier this year.
Details of the Bitwise Ethereum Trust
In the S-1 registration form filed by Bitwise, the proposed “Bitwise Ethereum Trust” will primarily hold Ethereum (ETF) and might engage in staking a portion of the fund’s assets through accredited staking providers to earn additional rewards. Staking, a process that has attracted regulatory scrutiny, involves locking up ether to bolster the security of the Ethereum network and validate transactions, with participants receiving newly minted ether as a reward.
Increasing Interest from Traditional Financial Institutions
Bitwise’s entry into the Ethereum spot ETF competition coincides with a surge in interest from conventional financial firms. Recently, industry giants like BlackRock, Grayscale, and VanEck have all submitted proposals to the SEC to launch their own Ethereum spot ETFs. The heightened competition reflects the potential demand for such financial products, as investors seek exposure to the second-largest cryptocurrency without directly acquiring and storing it themselves.
Expected Delay in Approval and Market Impact
Despite expectations for an Ethereum spot ETF approval this summer, a Bitwise executive suggested a potential delay until later in the year. Matt Hougan, Chief Investment Officer at Bitwise, believes that launching a spot Ethereum ETF in December could lead to greater asset accumulation compared to a May launch. Traditional finance sectors might need additional time to digest the impact of Bitcoin ETFs.
Challenges Faced by Ethereum ETF Applications
The SEC has recently delayed decisions on several prominent Ethereum spot ETF applications, indicating challenges faced by applicants like BlackRock, Grayscale, Fidelity, Invesco, and Galaxy Digital. Analysts, such as James Seyffart of Bloomberg, initially anticipated delays until May 23, with a potential denial of these applications now looming.
Optimism Among Experts and Financial Institutions
Despite setbacks, experts like British multinational bank Standard Chartered remain optimistic about the approval of Ethereum spot ETFs. Standard Chartered anticipates SEC approval by May, highlighting the absence of ether designation as a security by the regulator. The bank also forecasts an increase in ether price, reaching $8,000 by year-end and $14,000 by the close of 2025, partly driven by the expected approval of spot ETFs.
Projected Impact on the Cryptocurrency Market
The introduction of Ethereum spot ETFs could have a substantial influence on the cryptocurrency market. Following the approval of Bitcoin spot ETFs in January, substantial capital flowed into these funds, propelling the price of the leading cryptocurrency. A similar trend may materialize with Ethereum as mainstream investors gain a more accessible avenue to invest in the asset.
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