The SEC unexpectedly approves the Ethereum ETF, marking a new milestone for the crypto market

Amid widespread market expectations of receiving a delay or rejection notice, the U.S. Securities and Exchange Commission ( SEC ) unexpectedly approved the 19 b-4 application form for the Ethereum spot ETF in the early hours of May 24. This decision covers applications from several well-known institutions, including some large asset management companies.

Although the approval of the 19 b-4 form is an important step, ETF issuers still need to wait for the S-1 registration statement to take effect before they can officially begin trading. The SEC has just started discussions with issuers regarding the S-1 form, and this process may require multiple revisions, with the specific timeline still unclear. Analysts speculate that this process could take a few weeks. Typically, the approval process for an ETF takes about 5 months, while a Bitcoin ETF has taken at least 90 days. However, the industry expects that the approval process for the Ethereum spot ETF may be expedited.

Currently, VanEck has taken the lead in submitting a revised S-1 application form. Other potential issuers include several well-known asset management firms and cryptocurrency investment companies.

This approval marks a key step towards the listing of the Ethereum spot ETF, which is an important milestone for ETH as the second-largest encryption currency, and also a significant juncture for the further integration of the crypto market with traditional finance.

An analyst stated that just a week ago, he believed the idea of these ETFs getting approved by the SEC was unrealistic. However, this "impossible" thing has now become a reality.

SEC's attitude makes a 180-degree turn

The SEC's approval came as a surprise, as the regulators seemed to have had little interaction with the Ethereum ETF issuers prior to this. The market was once very pessimistic, believing that the chances of approval were only around 10%.

Just two weeks ago, an ETF analyst predicted that due to the lack of effective communication with potential issuers, along with the uncertainty surrounding Ethereum's regulatory status, the SEC might reject the application for the Ethereum spot ETF on May 23. He even believes that the Ethereum spot ETF might not be approved until the end of 2025.

However, the situation has changed dramatically in the past few days. Earlier this week, the SEC suddenly began communicating with issuers, asking them to resubmit the 19b-4 form. This change seems to have caught some departments within the SEC off guard as well. A source indicated that this unprecedented situation may stem from political factors.

This Wednesday, several applicant institutions modified their application documents, removing content related to staking. Some analysts believe this may be the SEC balancing its position that "ETH itself is not a security, but staked ETH is a security." In addition, the listing of some ETF applications on the websites of U.S. custodial trust and settlement companies is also seen as a positive signal.

The United States is about to enter an election year, and political factors may become an important reason for the approval of the Ethereum spot ETF, which also reflects a shift in the U.S. attitude towards crypto regulation. Recently, the U.S. government has released unprecedented friendly signals toward the crypto market. The House of Representatives passed a bill aimed at clarifying crypto regulation, while the Senate overturned a rule considered unfavorable to the crypto industry.

However, it should be noted that the Ethereum ETF may struggle to achieve the same level of attractiveness as the Bitcoin ETF. Some analysts estimate that the Ethereum ETF might only attract about 10% to 15% of the assets of the Bitcoin ETF, but this would still be a good performance for a newly issued ETF.

Important Milestones of Ethereum's Integration into Traditional Financial Markets

Since the Chicago Mercantile Exchange launched Bitcoin futures in 2017, the crypto market has begun its journey of integration with traditional financial markets. Here are a few key milestones for Ethereum in this process:

1. February 2021: The Chicago Mercantile Exchange launched Ether futures.

2. May 2023: Multiple institutions submitted and subsequently withdrew Ether futures ETF applications.

3. July/August 2023: Ether futures ETF applications reemerge.

4. August 2023: A large crypto asset management company won a lawsuit against the SEC, paving the way for subsequent ETF approvals.

5. September 2023: Multiple institutions began applying for spot Ether ETFs.

6. October 2023: Six Ether futures ETFs started trading in the United States.

7. March 2024: A crypto asset management company applies for a spot Ether ETF and provides correlation analysis.

8. April 2024: A blockchain software company sues the SEC, claiming it is trying to regulate ETH as a security.

With the SEC approving the Ethereum ETF, the countdown to its official listing and trading has begun. This milestone event not only marks Ethereum's further integration into the traditional financial system, but also opens up new development opportunities for the entire crypto market.