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With a generally bearish cryptocurrency market over the last week, crypto enthusiasts are reeling from the effects. The overall market has been on a downward trajectory as the US government and legal system become two of the most important players in the cryptocurrency arena.

EthereumFair

However, one play could change all that and bring back glory for cryptocurrencies: Ethereum Exchange Traded Funds (ETF), that have been approved by the Securities and Exchange Commission (SEC), May 23rd. Let’s do a quick dive into the specifics.

What is an Exchange Traded Fund (ETF)?

An ETF is a type of investment that lets investors track a specific asset or an index.
The investment itself becomes somewhat of an asset that is directly dependent on the underlying asset it is based on.
Benefits include diversification of investment portfolio and lowering of risk.

In the case of Ethereum ETF, it will let investors track the performance of Ethereum without directly buying Ethereum coins. This could be possible through derivatives such as futures contracts or some other financial instrument that is inevitably tied to Ethereum’s price.

Exchange Traded Fund (ETF)

Source: WealthDesk

Ethereum ETF Approval Effects

1. Not a Security

Ethereum will now become one of only two cryptocurrencies in the world that will not be at risk of being called out as securities by the SEC. While this may represent little value for those buying and selling Ethereum outside the US, other cryptocurrencies’ markets tend to follow the same pattern.

For instance, last year the Bitcoin ETF was approved by the SEC, it was followed by an approval for spot trading in Hong Kong as well.

2. Dominating the Developer Space

Ethereum has always dominated the developer space since its launch. This would continue to be the case after this ETF approval as Ethereum is set to be secure from any regulatory obstacles.

3. A whole new DeFi Economy

Since the early days of cryptocurrency, there has always been a fear that crypto will not be fully understood and any new regulation could harm its prospects. However, with the approval of Ethereum ETF, ETH is set to cement its place as the only secure and legal cryptocurrency, apart from Bitcoin. This could kick off a whole new DeFi economy based around Ethereum, further strengthening its place in the crypto world.

Ethereum ETF approval is a positive development for all parties involved, but especially for cryptocurrency users and investors.

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Ethereum ETFs – Crypto’s Trump Card

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