PORTLAND, Oregon - Ether grabbed the cryptocurrency spotlight after posting its biggest jump in more than a month, a surge pegged to speculation about the outlook for applications to start US exchange-traded funds (ETFs) for the token.
The second-largest digital asset was trading at about US$3,710 as at 11.20am on April 9 in Singapore, maintaining an 8.5 per cent advance from US hours. Ether’s 62 per cent year-to-date gain is closing in on market leader Bitcoin’s 68 per cent increase.
“There’s been some chatter about Ether ETF issuers meeting with the US Securities and Exchange Commission (SEC),” said Mr Edward Chin, co-founder of digital asset hedge fund Parataxis Capital.
A sceptical SEC reluctantly acquiesced to US spot-Bitcoin ETFs in January in the wake of a court reversal in 2023. The products have amassed US$59 billion (S$79.5 billion) in assets since their January launch, one of the most successful debuts ever for a fund category. That helped lift Bitcoin to a record high in mid-March.
Traders are alive to the possibility of an Ether rally if the SEC allows ETFs that directly hold the token. Investment titans such as BlackRock and Fidelity Investments have submitted applications to start such funds, but there are doubts over whether the regulator will give the green light.
While Bitcoin is acknowledged to be a commodity, the SEC argues that most other tokens are effectively unregistered securities and thus claims that the digital asset sector is rife with non-compliance. Explicit identification of Ether as an unregistered security would add a slew of challenges to rolling out an ETF.
SEC approval of spot-Bitcoin portfolios also hinged on the correlation between CME Bitcoin futures and price movements in the digital asset itself, which was deemed sufficient to allow for the detection of fraud and manipulation.
Bloomberg Intelligence ETF analysts James Seyffart and Eric Balchunas in a late March note assigned 75 per cent odds to the prospect of the agency rejecting Ether applications by May. They said the SEC may lean on data “showing relatively weak correlations between spot and futures markets”.
The SEC did not immediately reply to a request for comment about any discussions over Ether ETF applications between the agency and potential issuers. The request was made after regular business hours. BLOOMBERG
