Ether cryptocurrency ETFs are approved by the SEC

Federal regulators on Thursday approved an investment product tied to the cryptocurrency Ether, the most valuable digital asset after Bitcoin, in a major boost for the cryptocurrency industry.

The Securities and Exchange Commission said a group of exchanges may begin listing investment products known as exchange-traded funds, or ETFs, tied to the price of Ether. The products would offer people a quicker and easier way to invest in cryptocurrencies, potentially boosting prices and promoting wider adoption of digital currencies.

In January, the SEC approved similar products that track the price of Bitcoin, leading to a flurry of new investments that helped push the price of Bitcoin to a record high.

The impact of Ether approval may take longer to hit the market. Before exchanges can begin offering Ether ETFs, the SEC must also approve a separate set of applications from companies looking to issue them, including major financial firms such as BlackRock and Franklin Templeton. According to financial experts, this process could take weeks or months.

An SEC spokesperson said the agency had no comment beyond a formal order approving the products.

The news sparked celebrations in the cryptocurrency industry. A representative from 21Shares, one of the companies looking to offer the Ether investment product, called it an “exciting time for the industry at large.”

But industry critics called the approval a dangerous development that would encourage more investment in a volatile market.

“The SEC has failed to deliver on its mission to protect investors and markets,” Benjamin Schiffrin of Better Markets, a nonprofit that advocates for tougher financial regulations, said in a statement.

Offered by major financial services companies, ETFs are essentially baskets of assets: instead of buying assets directly, clients buy shares in these baskets. The products are easy to trade, from brokerage accounts with firms like Vanguard or Charles Schwab, and are popular with wealth advisors and other money managers.

In the world of cryptocurrencies, ETFs offer another key advantage: simplicity. Instead of exploring the intricacies of an online crypto portfolio, a client could go online and purchase shares of a Bitcoin or Ether ETF alongside stocks traded on Wall Street.

For years, cryptocurrency advocates have seen these products as a promising way to encourage broader use of digital currencies. Before Bitcoin ETFs were approved, crypto companies fought the SEC in court, scoring a legal victory in August that forced the agency to authorize the products.

Bitcoin ETFs have proven extremely popular, attracting billions of dollars in investments.

The price of Ether has rebounded in recent months, following a cryptocurrency downturn that began in 2022. Ether currently trades at around $3,800 per coin, more than 20% lower than its high of just under $4,900.

This is a small fraction of the price of Bitcoin, which trades at around $68,000 per coin.

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