Will an Ethereum spot ETF become a reality? Looking into the current situation, issues, and timing of approval

How likely is it to happen? If so, when will it be approved?

In January 2024, a Bitcoin spot ETF was finally approved in the United States and trading began. There is growing expectation in the cryptocurrency industry that an Ethereum spot ETF will be next. Here, we summarize the current situation and issues surrounding the approval of an Ethereum spot ETF.

Approval of physical ETF puts Bitcoin on par with traditional financial products

On January 11, the US Securities and Exchange Commission (SEC) approved a Bitcoin spot ETF, a long-cherished wish of the cryptocurrency industry.

An ETF (Exchange Traded Fund) is a "Exchange Traded Fund" that is listed and traded on a stock exchange. As you know, anyone can buy Bitcoin on a cryptocurrency exchange. So why is the approval of an ETF so important?

ETFs are a huge market that allows you to invest in various financial products such as stocks, bonds, and gold, and adding Bitcoin to the lineup is proof that it is "recognized as a trustworthy financial product."

Until now, Bitcoin has only been popular in the narrow world of the cryptocurrency industry, but it will now be on par with traditional financial products such as stocks.

In addition, the approval of the ETF and the start of trading will open the door to Bitcoin investment to investors around the world who have accounts at stock exchanges, and it is expected that this will be a catalyst for more funds to flow into the cryptocurrency industry than ever before.

For this reason, the cryptocurrency industry has been aiming to realize a Bitcoin spot ETF for many years.

Following the realization of a Bitcoin spot ETF, there are now growing calls for the realization of an Ethereum spot ETF, which will have the second largest market capitalization after Bitcoin.

So, to understand the current state of an Ethereum spot ETF, let's first look back at how a Bitcoin spot ETF came to be approved.

▶︎BTC price chart from December 20, 2023 (source: CoinMarketCap)

Prices fluctuated wildly due to conflicting information over the New Year period regarding the approval or rejection of a spot ETF.

On January 9, the official SEC account of X (formerly Twitter) announced the ETF's approval, but it was later revealed to be a false report, and the cryptocurrency market has been thrown into disarray by this topic. After the ETF was officially approved, prices temporarily soared, but have since returned to their original levels.