'Watershed moment': Crypto leaders, politicians and more react to Ethereum ETFs impact on markets, regulatory outlook

Spot Ethereum ETH -0.54% ETFs began trading in the U.S. on Tuesday, marking a milestone for the intersection of crypto and equity markets.

As of midday trading, cumulative trading volume exceeded $600 million among the listed exchange-traded funds .

Several industry experts and other leaders have weighed in on what this moment means for ether, the crypto market and digital assets as a whole.

“The approval of spot crypto ETFs signals another pivotal moment in the global transition toward digital assets,” Brett Tejpaul, head of Coinbase Institutional, said in a statement. “This wave of interest is not just a trend; it's a transformative force, reshaping the financial system and solidifying crypto's lasting presence in the financial landscape.”

Sui Chung, CEO of CF Benchmarks, called this a “watershed moment” for crypto and blockchain adoption.

“Traditional investors are not as familiar with the Ether proposition as they are with Bitcoin, in part because there is more to understand in terms of functionality and use cases,” Chung said, mentioning technicalities like Ethereum's gas fees, smart contracts, Proof of Stake security and layer-2 scaling solutions in particular.

"The educational process will expose investors to the Ethereum economy and highlight its key differences to Bitcoin, making it abundantly clear that the allocation drivers are different and both belong in a balanced investment portfolio," Chung said.

CF Benchmarks provides ether indices that will be used in five of the nine ETH ETF applications (BlackRock, Bitwise, Ark21 Shares, WisdomTree and Franklin Templeton).

Chris Perkins, the managing partner and president at crypto-native investment firm CoinFund, cheered ether’s stable supply, utility and compelling yield as setting it apart from bitcoin.

"On the surface, these are attractive characteristics for investors who are asking ‘What’s next?’ when it comes to cryptocurrency ETF investments after Bitcoin. The spot ETH ETF promises to bring a new generation ‘on chain,’ perhaps in search of the yield that the ETF will fail to deliver upon launch, or perhaps to unlock the power of the decentralized blockchain economy that awaits,” Perkins said.

The regulatory environment

Nathan McCauley, CEO of Anchorage Digital, said today helps bring “clarity” to the industry. Notably, ​​the question of whether ether is a security or a commodity has been up in the air for a while, as The Block’s Sarah Wynn previously reported .

“Between the rise of spot crypto ETFs and legislative progress in Congress, the regulatory outlook today is the most promising it has been in recent memory,” McCauley said. “The ETF wrapper will provide a new pathway for safe and compliant exposure to Ethereum, driving billions in inflows from institutions and consumers alike.  

Last valued at over $3 billion, Anchorage Digital is home to the only federally chartered digital asset bank.

Rep. Patrick McHenry (R-N.C.), who serves as chairman of the U.S. House Committee on Financial Services, said that “a comprehensive regulatory framework remains essential and the SEC must engage with Congress in a meaningful way.”

Rep. Tom Emmer (R-Minn.), the House majority whip, went one step further.

“Great to see the @SECgov adjust course and allow ETH Spot ETFs to begin trading today,” Emmer said in a post on X. “On second thought, we should actually be thanking the courts. Gary Gensler has got to go.”

Pat Doyle, a blockchain researcher at Amberdata, said bitcoin will likely continue to be the primary asset of interest, but in the longer term, the focus will shift toward Ethereum and other smart contract platforms.

“Regarding the upcoming election, there are two potential outcomes. A victory [for former President Trump] could expedite the adoption and regulation of cryptocurrencies, whereas a Democratic nominee win will likely advance these developments at a much slower pace,” Doyle said.

Market implications

As the 2024 U.S. presidential election season heated up this spring, both Republican nominee Donald Trump and President Joe Biden seemed to be changing their tune on the crypto industry at large. Despite Biden announcing his withdrawal from reelection, the market reaction may be muted.

“Biden's withdrawal from the race is unlikely to influence Ethereum ETF trading significantly. The market had already anticipated the trading of an ETH ETF in the near term, independent of Biden's political decisions,” Doyle said. “I expect short-term trends in ETH ETF flows to align proportionally with the market cap of Bitcoin ETFs. 

He said Ethereum ETFs will generate roughly one-third of Bitcoin's volume and flows in a similar timeline, which echoes sentiment from other industry analysts .

Chanchal Samadder, head of product at ETC Group, a provider of institutional-grade exchange-traded products in digital assets, said one negative to today’s launch is the lack of staking.

“We believe staking is a fundamental positive within our Ethereum ETP, ET32,” Samadder said. “Ethereum investments generate cash flows via staking rewards and, therefore, could be valued like a tech stock.”

Meanwhile, others believe this is the start of something big.

“This is just the beginning of the long-term build-out of cryptocurrencies with different characteristics, functions, and utilities. The coins are a product of the usage of the specific blockchain, and as usage grows, we believe the value of the coins will too,” Paul Marino, chief revenue officer at GraniteShares, said. “This will undoubtedly benefit Coinbase as it is the leading platform for trading bitcoin and cryptocurrency assets."

Ophelia Snyder, co-founder and president of 21Shares, also has her eyes set on the long term.

“The demand is there,” she said, adding the launch is a “net positive” for retail and institutional investors alike as well as the technology itself.