After the groundbreaking emergence of Bitcoin Exchange Traded Funds (ETFs), a development that many believed unlikely, attention in the crypto sphere has turned towards Ethereum. Those anticipating a prolonged period of exciting news may be disappointed, as the approval of an Ethereum (ETH) spot ETF seems imminent.

Significantly, the U.S. Securities and Exchange Commission (SEC), known for its extensive objections against the Bitcoin ETF over the years, now appears to have no valid reasons to oppose an ETH spot ETF. This product clearly fits the criteria of a commodity Exchange Traded Product (ETP).

Commissioner Hester Peirce's critique of the SEC's handling of the ETF approval process highlights the inconsistencies in past rejections, suggesting bias against Bitcoin. This bias was challenged by Grayscale's lawsuit, prompting a halt to such practices.

In contrast to the challenges faced by Bitcoin, the approval process for the Ethereum ETF is expected to be smoother. Currently, seven ETH spot ETF applications await review by the SEC. VanEck is at the forefront, with a deadline set for May 23, 2024, followed by BlackRock's application in August. Despite BlackRock's prominence, it may not have significant influence over approval conditions, given the SEC's ongoing review of VanEck's applications. This instills confidence in the market regarding approval by May.

The approval of the Ethereum ETF will open the door for other crypto-backed or linked ETPs, ranging from spot products to more complex instruments associated with digital assets. The success of these products will depend on liquidity, especially for Ethereum, which has a tighter supply of ETH due to its shift to Proof-of-Stake.

While liquidity is a concern, similar issues exist in traditional equities markets. As large ETP funds attract assets from global pension savings, solutions to liquidity challenges will emerge.

The debate over whether Ethereum is a security becomes irrelevant once it becomes an ETF. The decade-long delay in approving the Bitcoin ETF was largely political. The current clarity indicates a green light for this new asset class.