Federal regulators on Thursday approved an investment product tied to the cryptocurrency Ether, the most valuable digital asset after Bitcoin, providing a major boost to the crypto industry.
The Securities and Exchange Commission said a group of exchanges could begin listing investment products known as exchange-traded funds (ETFs) that are linked to the price of Ether. The products would provide people with a simpler and easier way to invest in cryptocurrencies, potentially driving up prices and encouraging wider adoption of digital currencies.
In January, the SEC approved similar products that track the price of Bitcoin, leading to a flood of new investments that helped push the price of Bitcoin to a record high.
It could take longer for the impact of Ether approval to hit the market. Before exchanges can begin offering Ether ETFs, the SEC must also approve a separate set of applications from companies that want to issue them, including major financial firms like BlackRock and Franklin Templeton. Financial experts say this process could take weeks or months.
An SEC spokeswoman said the agency had no comment beyond a formal order approving the products.
The news sparked jubilation in the crypto industry. A representative from 21Shares, one of the companies planning to offer the Ether investment product, called it an “exciting moment for the industry as a whole.”
But industry critics called the approval a dangerous development that would lead to broader investments in a volatile market.
“The SEC has failed in its mission to protect investors and markets,” Benjamin Schiffrin of Better Markets, a nonprofit that advocates for stricter financial regulations, said in a statement.
ETFs are offered by established financial services companies and are essentially baskets of assets. Customers do not purchase the assets directly, but rather purchase shares in these baskets. The products are easy to trade through brokerage accounts at companies like Vanguard or Charles Schwab and are popular with financial advisors and other financial managers.
In the crypto world, ETFs offer another key advantage: simplicity. Instead of dealing with the complexities of an online crypto wallet, a customer could go online and purchase shares of a Bitcoin or Ether ETF in addition to stocks traded on Wall Street.
For years, crypto advocates have viewed these products as a promising way to encourage wider use of digital currencies. Before the Bitcoin ETFs were approved, crypto companies battled the SEC in court, winning a legal victory in August that forced the agency to approve the products.
Bitcoin ETFs are extremely popular and attract billions of dollars in investments.
The price of Ether has been rising again in recent months after the crypto downturn began in 2022. Ether is currently trading at around $3,800 per coin, more than 20 percent below its peak of just under $4,900.
That’s a small fraction of Bitcoin’s price, which trades at around $68,000 per coin.
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2024-05-24 01:40:22
www.nytimes.com
