Crypto: How certain is SEC approval of an ether ETF?

The Securities and Exchange Commission (SEC) is quickly approaching its Thursday deadline over whether to approve an ether ETF. Crypto prices, including ethereum (ETH-USD), have been rallying this week on the hopes of a new investment offering, following in the footsteps of the spot bitcoin (BTC-USD) ETFs given the go-ahead at the start of 2024.

BitGo Go Network Head and Managing Director Matt Ballensweig joins Asking for a Trend Host Josh Lipton to explain his certainty that the SEC will ultimately approve an ether ETF and what demand for such a product could look like.

"There seems to be, I think, an intentional pivot by the current administration to signal really a support for digital currencies. We saw the Senate overturning SAB 121 last week, which would have made it really hard for banks and large dealers to hold crypto on their balance sheet," Ballensweig explains. "Obviously, that still has to get through the president, but there was also a landslide approval yesterday in the house of Reps. for crypto's Financial Innovation and Technology for the 21st Century Act [FIT21] which had both Democratic and Republican support."

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Luke Carberry Mogan.

Video transcript

Spot Ethereum, ETF S. Matt.

What do you think?

Are they gonna get the green light?

Thanks so much for having me on.

Uh Great to be here.

I uh I do think they're gonna get the green light here.

I mean, I will say, uh you know, I'm, I'm actively watching Crypto Twitter as we speak and I'm hearing rumblings that this might happen.

Uh You know, right after 5 p.m.

I've heard other reports that it might take still a few hours, but all, all signals point to that this is getting uh approved today.

Can I tell you, Matt if this gets approved?

I was dead wrong because I really thought I'm interested to get your take.

I really thought Se C chair Gary Gensler.

I mean, he, he did not want that spot Bitcoin ETF.

He, he had to be dragged to it.

Matt, it took a lawsuit.

I, I honestly thought there was gonna have to be another lawsuit.

If you were gonna green light a spot at the ETF, maybe you saw it differently.

Matt, look, I'll, I'll say this from, from a trader's perspective and, and from the institutional side of crypto, I think we were all very, very shocked to see how fast things have developed this week.

Um You know, especially just to your point knowing the pace at which the Bitcoin ETF uh you know, unfolded.

So hearing the news earlier this week that the SEC was asking some of these ETF issuers to amend the 19 4 filings in preparation for an ETF spot approval was very, very surprising and was not priced into the market at all.

I mean, the theory was trading around 3000 flat and immediately has spiked now up to 3700.

Um you know, and it's not just the the E ETF approval, but you know, there seems to be, I think an intentional pivot uh by the current administration to signal really a support for for digital currencies.

We saw the Senate overturning SAAB 121 last week, which would have made it really hard for banks and large dealers to hold the crypto on their balance sheet, obviously, that still has to get through the president.

Um But there was also a landslide approval yesterday in the House of uh in the House of Reps for cryptos Financial Innovation and technology bill the 21st century um which, which had both Democratic and Republican support.

So, you know that Baton is now with the Senate, but whatever the catalysts may be.

Um you know, it's becoming clear that I think Congress wants to be on the right side of history here.

Uh and have the us really be at the forefront of this, of this movement with, with, you know, innovations in finance and tech globally like we always have been.

So I think this clearly matters to voters.

Uh We also have an upcoming election.

So, you know, whatever those catalysts are, I think everybody in the institutional crypto world is, is very surprised at how, how this has progressed.

Um But, but very happy and Matt, let's say you do see the the spot, if your ETF S get the green light, they're approved.

What do you think Matt take out the crystal ball?

What do you think demand is like?

And where do you think demand comes from?

Yeah, it's a, it's a great question.

I mean, I think you can use, you know, the Bitcoin ETF as a proxy and kind of, you know, guide to understanding this at some point.

And if you just look at the flows of the Bitcoin ETF in the first few months here of trading, you know, it's been a funnel of capital into the ecosystem.

Uh We've seen, I think we saw 1.1 billion of netted flows in just the last five days.

Uh and about 13.5 billion of net new demand holistically for the asset.

Um So there's obviously a tremendous institutional uh I think, you know, demand pool out there and you know, Ethereum is gonna be something similar to that, you know, it, maybe it'll be some fraction of that.

Um But obviously, I think there are a lot of interested parties that now have the rails needed to add Ethereum as, as a part of their portfolio.

Um But even more importantly than just being, you know, the actual funnel of capital into the asset.

I think it's really the initiation of uh really a whole new class of investors becoming educated on the ecosystem.

Uh You have folks, you know, you had folks like Larry Fink, right, explaining the value crop of Bitcoin as a decentralized, right, non sovereign internet based inflation resistant currency and what that means.

And now, you know, investors are gonna have to go a little bit further down the rabbit hole to understand.

Well, what what about the Ethereum ecosystem?

You know, what are, what is smart contract for programmability?

How did decentralized exchanges work?

You know, what are the other uh alternative layer ones out there?

And how do you balance things like consensus with speed?

So all of these questions that you know, us in the in in the institutional crypto world have been exploring for some time will now become mainstream.

And I think that's gonna be a huge benefit to not just e but a lot of the other layer one protocols out in the space.

Um you know, over time and I do think we're gonna see a lot of capital come into the crypto crypto ecosystem as a result of this Ethereum spot ETF approval and Matt, I'll get you out of here on this.

Let's say we do the, we do see a spot Ethereum ETF it's approved, it gets the green light.

How does that in kind of impact and influence the price of Ethereum Matt?

What's your guess?

I mean, 12 months out.

Give me a target.

Yeah, all 1212 months out.

Um, I think, I think e will, will certainly challenge if not hit all time highs.

Uh, so wouldn't, wouldn't shock me to see a 5000 handle, uh, on e 12 months out from now.

Um, so I'll, I'll, I'll stick with that.

Matt.

Thank you so much for joining the show today.

That was great.

I appreciate your time.

My pleasure.

Thanks so much for having me on.