SEC widens accessibility of crypto investing with approval of ETFs for ether

livemint.com:

The Securities and Exchange Commission approved the first U.S. exchange-traded funds holding ether, the largest cryptocurrency behind bitcoin, in an about-face that surprised the crypto community.

The new funds, known as spot ether ETFs because they buy and sell the digital currency itself, will allow mainstream investors to buy and sell ether as easily as stocks or mutual funds. Ether is the in-house token on the Ethereum blockchain, an open software platform for developers to build and operate crypto applications, much like iOS or Android.

A spokesperson for the SEC said the agency won’t be commenting beyond the approval order.

Thursday’s decision paves the way for the eventual trading of ether ETFs, by allowing exchanges to list such products. At least 10 asset managers, including BlackRock and Fidelity Investments, applied to launch the first batch of ether ETFs. Those companies still need approval to start trading their specific funds on the exchanges through a filing called an S-1. The SEC could stall on approving that step.

The ruling marks at least a partial retreat from SEC Chair Gary Gensler ’s efforts to keep crypto from becoming more ingrained in traditional finance and potentially opens the door for other funds backed by smaller, riskier tokens.

The SEC approved funds that directly hold bitcoin in a landmark decision in January, only after losing a court challenge. In that case, however, the funds started trading the next day because the asset managers’ S-1 applications were approved concurrently. Before that, everyday investors who wanted to buy and sell digital currencies had to either trade on crypto exchanges and incur hefty transaction fees or purchase products that track the token in less direct ways.