- SEC finally approves Ethereum ETFs.
- Lawmakers push for approval at the last minute.
- The decision came after a legal challenge to the SEC.
After a significant legal challenge and delays, the U.S. Securities and Exchange Commission (SEC) has finally approved Ethereum exchange-traded fund (ETF) applications. However, the decision might not have been as it was, were it not for factors outside the SEC.
In fact, after being forced to change its approach by the Spot Bitcoin court ruling, the SEC saw pressures from all sides. Notably, the decision was preceded by a last-minute push from Congress, where a bipartisan group of legislators urged the SEC to rule in favor of the ETF applications.
Lawmakers Push For ETF Approval
On Thursday, May 23, the U.S. Securities and Exchange Commission (SEC) approved Ethereum exchange-traded funds (ETFs). The decision comes after advocacy from a bipartisan group of U.S. lawmakers who issued last-minute support for the approval, as well as a landmark pro-crypto bill.
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On May 22, a group of U.S. lawmakers advocated for the approval of Ethereum ETFs. In a letter addressed to SEC Chair Gary Gensler, lawmakers, including Financial Committee Vice Chairman Rep. French Hill and House Majority Whip Tom Emmer called for regulatory consistency.
“We urge the Commission to maintain a consistent and equitable approach when reviewing upcoming applications,” the letters said, arguing for Ethereum ETFs to get the same treatment as spot bitcoin ETFs. They also argued that approval would boost transparency and increase investor protection.
That same day, the U.S. House of Representatives also passed a landmark bill aimed a creating a new legal framework for crypto. The Financial Innovation and Technology for the 21st Century Act (FIT21) passed with a bipartisan vote of 279-136, showing significant support across party lines.
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The bipartisan nature of the recent legislative push indicated that the consensus in Washington is moving in favor of approval. This is a clear signal to the SEC, which recently came under fire for its earlier decision on spot bitcoin ETFs.
Gensler Concedes to The Court
The SEC was forced to review its stance on Ethereum ETFs after a legal challenge from the D.C. Circuit Court of Appeals. In April 2023, the Court rejected the SEC’s stance on spot bitcoin ETFs, judging it had acted “capriciously and arbitrarily,” prompting the agency to reassess its regulatory framework.
Hours ahead of the approval, SEC Chair Gary Gensler confirmed that the agency had to pivot in its approach after this ruling. “We are deeply committed to follow the law and how the courts interpret the law,” Gensler explained, expressing his commitment to adapt to the decision.
Still, ETF approval did not come lightly. The SEC asked to delay the decision in December 2023, pushing for a new deadline of May 2024. The agency had argued it needed to listen to further public input to review its decision. As late as this week, the SEC asked Fidelity, Grayscale, and other applicants to amend their 19b-4, which they promptly did.
On the Flipside
- Despite the approval, it will likely take a few weeks before the ETFs start trading on the market.
- The approval of Ethereum ETFs will likely prompt other crypto projects to get approval for their own ETFs.
Why This Matters
The approval of Ethereum ETFs signals greater acceptance of crypto in mainstream financial systems, potentially boosting adoption and market caps across the sector.
Read more about the Ethereum ETF approvals:
BREAKING: SEC Approves All Spot Ether ETFs in Total Pivot
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