The listing of a Bitcoin spot ETF is expected to attract major Wall Street institutions to flock into cryptocurrencies, and an Ethereum spot ETF may be next. According to media reports, at least 10 companies, including Fidelity Investments (Fidelity Investments), have submitted applications to launch the first batch of Ethereum spot ETFs listed in the US, and institutions will earn management fees.

Ethereum is a built-in token on the Ethereum blockchain. The price was close to $3,300 on Tuesday, the first time since April 2022. This makes its market capitalization around $360 billion, compared to Bitcoin's market capitalization of over $1 trillion.

The deadline for the US Securities and Exchange Commission (SEC) to approve these Ethereum spot ETF listing applications is May of this year, and it is expected that the same decision will be made on other similar applications at the same time. Some opponents say that approving an Ethereum spot ETF may pave the way for the launch of ETFs with more speculative cryptocurrency assets, and this will expose investors to more risks they are unaware of. Experts point out that the price of Ethereum is too volatile.

However, the volatility and potential price manipulation are not unique to Ethereum; over the years, thousands of cryptocurrencies have sprung up, and only about a dozen have reached a significant scale. Currently, the SEC has not clearly stated whether it will approve or reject the Ethereum application. Since Wall Street applied for a spot Bitcoin ETF listing, several new factors have come into play.

Over the years, the SEC has repeatedly rejected applications for spot Bitcoin ETFs on the grounds that Bitcoin is prone to fraud, and ultimately only approved their listing under a court order. According to the data, after the listing of spot Bitcoin ETFs, investors will soon invest about 13 billion US dollars into nine of them.

Some analysts say that approval of a Bitcoin spot ETF is likely to mean that an Ethereum spot ETF will also be approved. In approving a Bitcoin spot ETF, the SEC mentioned the high correlation between the price of Bitcoin and the price of Bitcoin futures. Ethereum is the only cryptocurrency other than Bitcoin that trades futures contracts on CME, which is regulated by the Commodity Futures Trading Commission (CFTC).

The SEC allowed several Ethereum futures ETFs to be launched in October, but they didn't attract much interest.

In the January listing application for spot Bitcoin ETFs, the agency also made significant changes to the rules on how to manage such ETFs, and the current Ethereum spot ETF listing application also listed such details. Analysts said that these technical issues have been resolved, which is another reason why an Ethereum spot ETF is expected to be approved. It is estimated that it will be approved this year.

However, some analysts believe that the key difference between Ethereum and Bitcoin means approval is far from a foregone conclusion.

First, SEC Chairman Gary Gensler has always described Bitcoin as a commodity, but has not clearly stated whether Ethereum is a security or a commodity. This difference determines which agency supervises the asset and what regulations it is subject to.

Another potential obstacle is that owners of Ethereum can use their holdings and computing power to help the Ethereum network verify transactions. This process is called staking, which allows holders to earn interest on their assets. This is critical, and it has always received attention from the SEC. In February of last year, the SEC ordered cryptocurrency exchange Kraken to stop providing staking services in the US and sued Coinbase Global a few months later, claiming that its staking program was an unregistered security.

Analysts believe that if the SEC approves an Ethereum spot ETF, it may use a ban on staking as a condition.

However, the agency that submitted the Ethereum ETF listing application proposed different solutions to this issue. According to information, the crypto asset management company Grayscale Investments has applied to convert its $9.4 billion Ethereum trust into a spot ETF. The company said in a blog post that it will not provide pledge services in the trust due to lack of tax guidance and other risks.

Franklin Templeton said in his application that it may stake part of its Ethereum spot ETF assets through other companies and add the interest earned as income to the fund.

Analysts believe that if the SEC approves any Ethereum spot ETF applications, these ETFs are unlikely to be as popular as Bitcoin spot ETFs, but this is unlikely to stop Wall Street companies from offering these ETFs because Bitcoin spot ETFs have already achieved tremendous initial success.

Data shows that since the launch of Bitcoin spot ETFs, they have attracted more than $6 billion in net inflows, while gold ETFs have experienced a net outflow of nearly $3 billion. All of this helped Bitcoin's price surpass $57,000 for the first time since November 2021 on Tuesday. This price increase has propelled Bitcoin's market capitalization to over $1.1 trillion, surpassing Berkshire Hathaway, and almost as big as Meta.

Overall, behind the rise driven by Bitcoin ETFs, the total value of the cryptocurrency market has jumped to around $2 trillion for the first time in nearly two years.

Editor/Somer