Goldman Sachs Anticipates Approval of Spot Ether ETFs

Goldman Sachs' Head of Digital Assets Expects Approval for Spot Ether ETFs and is Closely Monitoring this Progress in the Upcoming Months.

Goldman Sachs’s digital assets chief believes that spot Ether ETFs will be approved.

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By Shalini Nagarajan, Last updated: January 24, 2024

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Goldman Sachs’ digital assets head, Mathew McDermott, predicts that spot Ether ETFs will be approved in the coming months. In an interview with CNBC, McDermott highlighted that the classification of ether as a security plays a crucial role in the approval decision. However, he remains positive that it will ultimately be determined and approved.

This comes after the SEC recently approved 11 spot Bitcoin ETFs on January 10, a significant achievement for the industry after initial rejections. Goldman Sachs, being one of the key players, had anticipated this approval and has expressed an “incredibly positive” view of its impact on the market. McDermott believes that having big regulated institutions issue Bitcoin ETFs makes a powerful statement to the market.

Cost Benefits of Spot Bitcoin ETFs

McDermott emphasizes that investing in Bitcoin through these ETFs is more cost-effective compared to direct crypto investment. A spot Bitcoin ETF allows investors to gain exposure to Bitcoin’s price movements without owning the cryptocurrency itself, as the ETF holds actual Bitcoin. This addresses the higher cost associated with direct investment in Bitcoin, which had put noticeable pressure on asset managers regarding ETF fees. Nevertheless, McDermott acknowledges potential future risks due to high investments and scarcity of the underlying asset.

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More Complexities than Bitcoin ETF Approval?

While spot Bitcoin ETFs have seen significant approval, the same cannot be said for spot Ethereum ETFs. Traditional financial institutions like Blackrock, Fidelity, and VanEck have submitted applications for spot Ethereum ETFs to the SEC, with seven applications awaiting approval. Bloomberg ETF Analyst, Eric Balchunas, estimates a 70% chance of a spot Ethereum ETF approval by May.

Yet, approval for a spot Ether ETF is not straightforward. The uncertain regulatory status of ether as a security poses challenges for approval. This is in contrast to the well-established classification of Bitcoin as a commodity. Additionally, SEC Chair Gary Gensler has emphasized that an approved spot Bitcoin ETF does not guarantee automatic approval for other crypto ETFs.

SEC’s Decision on First Spot Ether ETF due May 23

According to a Deutsche Bank research note, the SEC is expected to make its first decision on a spot Ethereum ETF application by May 23. VanEck, among other applicants, eagerly awaits the verdict. Analysts from Deutsche Bank suggest that upcoming ETF approvals could drive further adoption by allowing direct crypto exposure.

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Q&A:

Q1: What impact will the approval of spot Ether ETFs have on the market?

A1: The approval of spot Ether ETFs is expected to have a significant impact on the market. It would allow investors to gain exposure to Ethereum’s price movements without actually owning the cryptocurrency, making it more accessible and cost-effective for those looking to invest in Ethereum.

Q2: How does the classification of ether as a security affect the approval of spot Ether ETFs?

A2: The classification of ether as a security poses challenges for the approval of spot Ether ETFs. Unlike Bitcoin, which has been classified as a commodity, the regulatory status of ether is uncertain. This uncertainty adds complexity to the approval process and could potentially delay or impact the decision.

Q3: Will the approval of spot Bitcoin ETFs guarantee automatic approval for spot Ether ETFs?

A3: No, the approval of spot Bitcoin ETFs does not guarantee automatic approval for spot Ether ETFs or other crypto ETFs. Each cryptocurrency undergoes its own evaluation and approval process by the SEC. While the approval of spot Bitcoin ETFs is a positive development for the industry, it does not set a precedent for the approval of other crypto ETFs.

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Looking ahead, the approval of spot Ether ETFs would further solidify the legitimacy and mainstream adoption of cryptocurrencies. As more institutions enter the market and provide regulated investment vehicles, it opens the door for more investors to participate. This could lead to increased liquidity, price stability, and overall growth in the crypto market.

In conclusion, the anticipation of spot Ether ETF approval by Goldman Sachs’ digital assets head signals a positive outlook for the crypto market. The cost benefits and accessibility offered by these ETFs make them an attractive investment option. However, it is important to consider the complexities and challenges that come with getting spot Ether ETFs approved. As we await the SEC’s decision, it is crucial to stay informed and evaluate the potential impact on the overall market.

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References: 1. Ether ETF Hopes Drive Smart Money Bets on Historic Bitcoin ETF Approval 2. Bitcoin Accepted Here? Coin Bureau’s YouTuber Guy Turner on How He Got Into Crypto 3. Spot Bitcoin ETFs Approved: Here’s How Crypto Executives Reacted 4. Bitcoin Price Stuck? Why iShares Bitcoin Trust (IBIT) Could be the Solution 5. Fake Bitcoin ETF Approval Tweet Gives a Sneak Peek at ETH’s Price Spike if Ethereum ETF Approval 6. SEC’s Decision on First Spot Ethereum ETF due May 23

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