US SEC Closes Investigation into Ethereum Network
As per different news sources, the Securities and Exchange Commission opened a probe into the Ethereum network. However, a recent report published by Consensys indicates that the regulatory agency has decided to drop the case.
A recent report indicated that the decision to retract a probable lawsuit on Ethereum was done after the agency approved multiple Ethereum spot ETFs.
Ethereum as a Commodity
The report also indicates that the SEC has now classified Ethereum as a commodity rather than a security. However, there are some market participants that are not on the same page.
As per analysts at Consensys, SEC officials opted to withdraw a lawsuit against Ethereum because of the weak legal standing. According to the blockchain research network, the agency shut down the investigation on the Ethereum network this month to determine whether it was a security or not.
Lawyer Laura Brookover retained that the SEC is unlikely to make any claims against ETH as a security. She further stated that the investigation of ETH was a reaction of the regulatory agency when pushed to detract the subpoenas on Consensys.
The firm received the legal notice from the SEC after it issued a prediction of ETH as a commodity following the ETF approval rule change.
Asian Financial Regulators to Approve Bitcoin and Ethereum ETFs
Another report has indicated that various national jurisdictions in Asia are likely to approve and list Bitcoin and Ethereum ETFs. On this account, two Bitcoin ETFs were launched in Australia and 6 Bitcoin and Ethereum ETFs were listed in Hong Kong.
In Australia, Monochrome Asset Management and VanEck are two Bitcoin spot ETF issuers. There are multiple financial firms that have filed a crypto ETF application.
At the same time, ETFs are also listed on international exchanges. However, institutional investors are likely to look at Asian markets. ETF issuers in different jurisdictions have plans to expand the scope of the investment vehicle.
The analysts are looking at Asian nations where local firms lack the trading volume to cover issuance cost and maintenance of crypto ETFs. In Hong Kong, businesses are also looking to scale up to mainland China.
The firms that have already listed spot ETFs backing digital currencies in multiple jurisdictions have an advantage over the others. Therefore, there is a chance for these firms to capture a greater market share.
The regulators in Singapore are taking a back foot on the matter for the time being. On the other side, there is a chance for Japanese and South Korean regulators to approve digital currency ETFs.
Asian Nations are a New Territory for Crypto ETFs
In Asia, South Korea has stringent capital laws that could constrict the institutional investors in the region from expanding into new territories. Analysts opine that the near-term goal of ETF issuers is to acquire assets in their local jurisdictions with a global outlook.
However, this strategy could take a longer time for Asian ETF filers to set up a backing reserve in comparison to American firms.
Bitcoin spot ETFs listed in the United States on 11th June 2024 reported a net inflow of $4.6 billion on the first day of trading. This number has now become $30 billion in AUM.
Meanwhile, the Bitcoin spot ETFs issued and listed in Hong Kong recently produced inflows in millions of dollars. The Asian ETF sector reported a CAGR rate of 20% in the last decade.
Investors opting for digital asset ETFs in Asia are still less frequent than the United States. The total AUM of all ETF products listed in seven Asia Pacific nations account for 4% of their aggregate market cap. In the United States, AUMs from ETFs are around 16% of the total market cap.
Investors with a higher demand for digital ETFs hail from Japan and Australia with 9% and 7% ETF AUM. In Hong Kong, the ETF AUM is only 1%. However, UK-based CF Benchmarks has projected the Hong Kong ETFs market to reach $1 billion by 2024.
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