Federal regulators on Thursday approved an investment product linked to the Ether cryptocurrency, the most valuable digital asset after Bitcoin, in a big boost for the crypto industry.
The Securities and Exchange Commission said a group of exchanges could begin trading investment products known as exchange-traded funds, or ETFs, tied to the price of Ether. The products would offer an easier and simpler way for people to invest in cryptocurrencies, which could boost prices and promote broader adoption of digital currencies.
In January, the SEC approved similar products that track the price of Bitcoin, which generated a flood of new investments that helped drive Bitcoin price to record high.
The impact of Ether approval could take longer to reach the market. Before exchanges can start 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. That process could take weeks or months, according to financial information. experts.
An SEC spokeswoman said the agency had no comment beyond a formal order approving the products.
The news sparked celebration in the crypto industry. A representative from 21Shares, one of the companies looking to offer the Ether investment product, called it an "exciting time for the industry as a whole."
But industry critics called the approval a dangerous development that would encourage more investment in a volatile market.
"The SEC has failed in its mission to protect investors and markets," said Benjamin Schiffrin of Better Markets, a nonprofit that fights for stricter financial regulations. said in a statement.
Offered by major financial services companies, ETFs are essentially baskets of assets: instead of purchasing the assets directly, clients buy shares of these baskets. The products are easy to trade, from brokerage accounts with companies like Vanguard or Charles Schwab, and are popular with wealth advisors and other financial managers.
In the world of cryptocurrencies, ETFs offer another key advantage: simplicity. Instead of navigating the intricacies of an online crypto wallet, a customer could go online and buy shares in a Bitcoin or Ether ETF along with 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, cryptocurrency companies fought the SEC in court, winning a legal victory in August that forced the agency to allow the products.
Bitcoin ETFs have proven hugely popular and have attracted billions of dollars in investments.
The price of Ether has recovered in recent months, after a cryptocurrency crash that began in 2022. Currently, Ether trade winds to around $3,800 per coin, more than 20 percent from its high of just under $4,900.
That's a small fraction of the price of Bitcoin, which trades at about $68,000 per coin.
