The publicly traded corporation expects institutions will continue testing the waters in the Ethereum ecosystem.
S&P Global, the majority owner of the S&P Dow Jones Indices, said Ethereum is a potential settlement layer for financial markets.
“Ethereum provides one path towards interoperability,” compared to the “walled garden” of permissioned blockchains that many institutions are using today, said Andrew O’Neil, director of S&P Global’s digital assets arm, in an emailed note today.
S&P is the publisher of over 830,000 indices, which are used as benchmarks for 575 ETFs. As such it’s noteworthy that a firm that’s part of the foundation of traditional finance views Ethereum as a core piece of future financial markets.
“Many private blockchains have been designed to be compatible with Ethereum’s virtual machine, which may support a convergence around the Ethereum ecosystem over time,” O’Neil said.
Ethereum ETF Launch
The commentary comes ahead of the launch of the highly anticipated Ethereum ETF. The ETH ETFs are expected to begin trading on July 23, led by institutions such as Blackrock, Franklin Templeton, Van Eck, and Grayscale.
Ethereum’s spot ETF launch coincides with the booming development of real world assets (RWAs) in the form of tokenized treasuries and digitally issued bonds.
Growing RWA Market
The total market capitalization of tokenized treasuries is up to $1.92 billion according to RWA.xyz. However this makes less than 0.01% of the total value of outstanding treasury securities in the US, which is now over $27 trillion.
O’Neil said that without a secondary market, RWAs will not be able to be adopted at scale.
When expanding on other use cases of Ethereum, O’Neill pointed to token-level permissions for KYC, and zero-knowledge proofs for privacy requirements.
ETFs Impact on Price
Since the launch in January, the Bitcoin ETFs have experienced over $17 billion in cumulative inflows according to the Farside Investors, helping drive the price of Bitcoin up 44% in 6 months.
Despite this success, the market has remained skeptical that spot Ethereum ETFs will have similar impact. ETH’s price is up just 11% from when it was announced that the Ethereum ETFs were likely to be approved, and is down 2.4% in the last 24 hours.
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