Ethereum ETFs
Ethereum ETFs are exchange-traded funds that track the value of Ethereum and are traded on traditional market exchanges rather than cryptocurrency exchanges. These exchange-traded funds (ETFs) provide investors with a regulated and accessible avenue to gain exposure to the price movements of Ethereum without directly owning the cryptocurrency. On May 23, 2024, the United States Securities Exchange Commission approved 8 spot Ethereum ETFs. [1]
Overview
Exchange-Traded Funds (ETFs) are investment funds that hold a collection of assets, such as stocks, bonds, or commodities. They are designed to track the performance of a specific index, like the S&P 500, or a group of assets. Investors can buy shares of an ETF, which are traded on stock exchanges, just like individual stocks. When one invests in an ETF, they are essentially buying a piece of the entire portfolio of assets held by the fund. With Ethereum ETFs, investors are to speculate on its performance without the complexities of cryptocurrency ownership. [1][2]
Approved by regulatory authorities, such as the U.S. Securities and Exchange Commission (SEC) and other relevant governing bodies, Ethereum ETFs have garnered significant attention within the financial markets. They offer investors a convenient and regulated way to participate in the cryptocurrency market, while also experiencing the benefits of liquidity, diversification, and traditional market hours. [3]
Spot Ethereum ETF approval
On May 23, 2024, The U.S. Securities and Exchange Commission (SEC) approved eight spot Ethereum ETFs in an omnibus order. The ETFs approved are from prominent financial institutions, including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. [12] [13]
Although the SEC has approved the 19b-4 forms for these ETFs, the issuers must still have their S-1 registration statements go effective before trading can commence. The SEC has recently initiated discussions with issuers regarding their S-1 forms, but the timeline for this process remains uncertain. Analysts speculate that it could take several weeks to a few months for the S-1 forms to be processed and approved. Bloomberg ETF analyst James Seyffart noted, "If they work extremely hard, it can be done within a couple of weeks, but there are plenty of examples of this process taking three or more months historically." [12]
- BlackRock - iShares Ethereum Trust [13]
- VanEck - VanEck Ethereum Trust
- ARK 21Shares - ARK 21Shares Ethereum ETF
- Fidelity - Fidelity Ethereum Trust
- Invesco Galaxy - Invesco Galaxy Ethereum ETF
- Grayscale - Grayscale Ethereum Trust
- Hashdex - Hashdex Nasdaq Ethereum ETF
- Franklin Templeton - Franklin Templeton Ethereum ETF
Ethereum Strategy ETF Approval
On September 28, 2023, ETF and mutual fund managing company, VanEck announced the approval of Ethereum ETFs and the subsequent launch of the VanEck Ethereum Strategy ETF (EFUT), an actively managed ETF designed to seek capital appreciation by investing in Ether (ETH) futures contracts. On the same day of approval, VanEck released two TV commercials both around the theme of "Enter the Ether", announcing the imminent launch of its Ethereum Strategy ETF, identified by the ticker symbol EFUT. [7][8]
The approval process for Ethereum ETFs involves regulatory scrutiny and oversight. Regulatory bodies, such as the SEC in the United States, evaluate the ETF's structure, custodial arrangements, and compliance with investor protection standards before granting approval. [4][5]
The Fund is set to allocate its capital into standardized Ethereum (ETH) futures contracts, which are cash-settled and traded on commodity exchanges duly registered with the Commodity Futures Trading Commission (CFTC). At present, the Fund's sole intention is to invest in Ethereum futures exclusively traded on the Chicago Mercantile Exchange (CME). EFUT is slated for listing on the CBOE (Chicago Board Options Exchange) and will be under the active management of Greg Krenzer, who serves as the Head of Active Trading for VanEck. [4]
Valkyrie Becomes First Ethereum Futures ETF Provider
On September 28, 2023, Valkyrie Investments, a financial services provider, achieved a notable milestone by becoming the first provider to offer Ether futures through an ETF. This Ethereum ETF allows investors to gain exposure to Ethereum's performance by trading futures contracts, which are linked to the cryptocurrency's price movements. [6]
Bitwise to launch Ethereum ETF
Bitwise, a prominent investment management firm, made headlines by announcing the launch of its Ethereum ETF. With trading open from October 2, 2023, Bitwise aims to provide investors with a regulated and accessible means of investing in Ethereum, by launching two Ethereum ETFs: the Bitwise Ethereum Strategy ETF (AETH) and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP). [10][11]
Ethereum Futures ETF Applications
- Volatility Shares: Ether Strategy ETF
- Filed: 07/27/2023
- SEC Response: 10/11/2023
- Listing Exchange: CBOE BZX Exchange
- Bitwise: Ethereum Strategy ETF
- Filed: 08/01/2023
- SEC Response: 10/16/2023
- Listing Exchange: NYSE Arca
- Roundhill: Roundhill Ether Strategy ETF
- Filed: 08/01/2023
- SEC Response: 10/16/2023
- Listing Exchange: Not specified
- VanEck: VanEck Ethereum Strategy ETF
- Filed: 08/01/2023
- SEC Response: 10/16/2023
- Listing Exchange: Not specified
- ProShares: Short Ether Strategy ETF and ProShares Ether Strategy ETF
- Filed: 08/01/2023
- SEC Response: 10/16/2023
- Listing Exchange: Not specified
- Grayscale Investments: Grayscale Ethereum Futures ETF
- Filed: 08/01/2023
- SEC Response: 10/16/2023
- Listing Exchange: Not specified
- Direxion Bitcoin Ether Strategy ETF
- Filed: 08/02/2023
- SEC Response: 10/16/2023
- Listing Exchange: NYSE Arca
- Bitwise Bitcoin and Ether Market Weight ETF
- Filed: 08/03/2023
- SEC Response: 10/17/2023
- Listing Exchange: Not specified
- Proshares Bitcoin & Ether Strategy ETF
- Filed: 08/02/2023
- SEC Response: 10/16/2023
- Listing Exchange: Not specified
- Proshares Bitcoin & Ether Equal Weight Strategy ETF
- Filed: 08/03/2023
- SEC Response: 10/17/2023
- Listing Exchange: Not specified
- Kelly Ethereum Ether Strategy ETF (EX)
- Filed: 08/04/2023
- SEC Response: 10/18/2023
- Listing Exchange: Not specified
- Valkyrie Bitcoin and Ether Strategy ETF
- Filed: 08/04/2023
- SEC Response: 10/3/2023
- Listing Exchange: Nasdaq
- Bitwise Bitcoin and Ether Equal Weight Strategy ETF
- Filed: 08/10/2023
- SEC Response: 10/09/2023
- Listing Exchange: NYSE Arca
- Valkyrie Ethereum Strategy ETF
- Filed: 08/16/2023
- SEC Response: 10/30/2023
- Listing Exchange: Nasdaq. [9]
CBOE's Official Launch Date
CBOE (Chicago Board Options Exchange) announced on July 19, 2024, that five spot Ethereum exchange-traded funds (ETF) will begin trading on the Chicago Board Options Exchange on July 23, 2024 “pending regulatory effectiveness”. [14]
"We are pleased to announce that 1 Exchange Traded Product ('ETP') will be listed on Cboe and will begin trading as a new issue on July 23, 2024," the exchange said in a new issue notification[15]
The five spot Ether ETFs set to commence trading are the 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF, and Franklin Ethereum ETF. The four other spot ETH ETFs will trade on either Nasdaq or New York Stock Exchange (NYSE) Arca although there has been no official launch announcement yet from the exchanges. [14][15][16]
On July 23, 2024, Spot Ethereum ETFs officially started trading. In a post to X (formerly Twitter), Coinbase CEO Brian Armstrong discussed what is a monumental day for crypto. As the Ethereum ETF began trading, Armstrong called the launch, “another huge step for regulatory clarity,” in the US. Specifically, it’s confirmation that ETH is not a security.
"Another huge step forward for regulatory clarity: ETH is not a security! We’ve been saying it for years and today the SEC finally made it official. Coinbase is proud to be the trusted partner and custodian powering 8 of the 9 newly approved ETH ETFs." - he tweeted[17]
