Ethereum ETFs Might Be Approved in May

The issue of cryptocurrency-backed exchange-traded funds has long been a topic of discussion among users and researchers. The approval of this asset class would help the marketplace tremendously, allowing it to perhaps finally enter the world of traditional finance. Institutional and retail investors are particularly interested in this project, which is good news for the crypto market, as these are the users that can bring the most capital. According to Binance, the announcement that an approval is imminent has been enough to drive market optimism and push prices upward.

However, a definitive announcement has already been delayed several times, and some investors have lost hope that they’ll get to see an ETF in the near future. Several high-profile companies that manage assets are involved as well, including BlackRock, the largest company of its kind on the planet. They are all waiting for the SEC to come up with a decision. Many were anticipating an answer during the first days of January, but it seems now that this view has been little more than make-believe.

Ethereum ETFs

The Bitcoin ETFs have been amply discussed over the past few months, so much so that Ethereum remained somewhat neglected. Now, the latest information says that the Securities and Exchange Commission will push the decision regarding ETH ETFs to May 2024. This is slightly later than the date investors were expecting in December, which was sometime around the latter days of January. The decision to delay again comes after the agency said it needs more time to obtain input from the general public on whether the ETFs should be listed.

While many investors were disappointed at this turn of events, others were anticipating it and were, in fact, not at all alarmed. In fact, according to the opinion of some of them, this is a natural part of the proceedings required when interacting with traditional regulators. So now, investors are looking forward to getting an answer toward the end of spring. Some users are confident that the announcement will be positive based on the fact that the Commission approved Ethereum-backed futures ETFs in the past.

ERC-3643

The ERC-3643 token standard incorporates real-world assets, commonly referred to as RWAs, including commodities, bonds, equities and fiat currencies, directly into the Ethereum blockchain. The system involves procedures related to coin minting, asset management and the ability to trade tokens. This type of functionality is not standard across blockchain systems, but Ethereum has always stood out from the rest of the crowd due to its ability to drive innovation forward.

On December 15th, the Ethereum Improvement Proposal reached the final stage of its development, being recognized as a standard in the tokenization process of non-virtual assets. This newfound status means that the project reached community consensus, and that everyone agrees on the proposal following reviewing and discussions. All the similar standards that were used in the past, including ERC-20, followed similar steps before being unanimously approved within the community.

ERC-3643 works by verifying users’ eligibility through an SSI framework that provides credentials that are simultaneously anonymous yet fully verifiable. This tech is built on top of the previous ERC-20 system and uses two layers that aim to improve security and guarantee compliance. According to estimates, this technology is, in fact, a glimpse into the future, as current estimates show that the tokenization of real-world assets will be a $10 trillion market by 2030. At the moment, the value is somewhere around $300 billion.

There are many benefits as well, including faster settlements, better transparency and increased liquidity. Investors could also enjoy fractional trading of artwork, real estate and intellectual property.

ETH as a commodity

When it comes to the cryptocurrency market, much of the information comes from estimations and predictions. The same is true for the ETF approval. Here, too, investors are looking for hints that could suggest the direction the market will take. The United States Securities and Exchange Commission has dealt with crypto before, despite its current reluctance to approve the ETFs faster. In fact, it has implicitly accepted ETH as a commodity by approving futures ETFs the previous year.

This is directly correlated to the future of traditional ETFs in the United States. Yet, it’s important to remember the difference in the classification of these assets. Commodities and securities deal with different requirements, and the regulatory processes and taxation systems attached to each are entirely different.

Dencun hard fork

A hard fork is a branching in the blockchain that splits a coin into two halves. The Dencun upgrade will combine the Cancun and Deneb upgrades set to be introduced to the Ethereum ecosystem in 2024. Investors are already expecting a critical year for the crypto because of this movement. However, there are also some who believe that the adjustments will be minor compared to the previous year, including co-founder Vitalik Buterin.

After seeing the roadmap of how Ethereum will evolve throughout this year, some users believe that the lack of numerous changes and shifts means that ETH will have more room to develop well and consolidate its price. The launch date of the upcoming Dencun update is still not known, but there were some suggestions of when it could occur back in October 2023. However, since none of them were confirmed, investors are still unsure what to expect.

The upgrade will launch on the mainnet, and could increase the availability of data for layer two rollups and proto-danksharding. This means that transaction costs would be reduced all the way to those incurred by the end users. It might also succeed in making Ethereum more competitive by improving blockchain efficiency and allowing transactions to become more affordable.

To sum up, investors must remain aware of the changes affecting the blockchain, as well as the many ways it could influence their transactions. Securing your portfolio means knowing when to hold onto your assets and the best times to buy and sell. That is the surest way to guarantee you’ll see more revenue than losses and enjoy safe trading.