- High-profile applications for Ethereum futures ETFs have been filed by at least six firms, including Grayscale, VanEck, Bitwise, Volatility Shares, ProShares, and Round Hill Capital.
- The first Ethereum futures ETF could launch as soon as October 2023 if approved by the SEC.
- These ETFs would invest in futures contracts traded on the CFTC-regulated Chicago Mercantile Exchange, instead of directly holding Ethereum.
With the buzz surrounding Bitcoin Spot ETFs beginning to wane, Ethereum futures ETFs are grabbing the spotlight. The crypto world has been stirred by recent filings for high-profile Ethereum Futures ETF applications. At least five different firms submitted applications within a single day, with another one filed last week. With this shift in attention, let’s dive into the details and explore what’s happening in the Ethereum futures ETF landscape.
Volatility Shares: Pioneering the Ether Strategy ETF
Volatility Shares is leading the charge with its ambitious filing for the Ether Strategy ETF (ETHU), slated to become the first issuer of an ETF with a focus on Ether. The proposal, filed on July 28 with the SEC, comes after the firm introduced the first leveraged Bitcoin futures ETF in June.
According to the plans, the ETHU would comply with the provisions of the 1940 Act and invest up to 25% of its assets in cash-settled Ether futures contracts traded on the CFTC-regulated Chicago Mercantile Exchange (CME). This ETF would not directly invest in Ethereum but would include investments in reverse purchase agreements and shares of other investment companies.
Volatility Shares intends to list and primarily trade its shares on the CBOE BZX Exchange. With $173.5 million across four exchange-traded funds, the firm’s proposed Ether ETF has set the stage for others to follow.
Other Contenders Appear
- Bitwise: Renewed Application
Bitwise has re-applied for its Ethereum Strategy ETF (ETHG) with a plan to invest in cash-settled ETH futures contracts without direct exposure to the current spot price. The fund also includes provisions to channel investments through a Cayman Islands-based subsidiary.
- Roundhill and VanEck: Capital Appreciation Focus
Both Roundhill and VanEck aim to capture the growth in Ethereum by investing in CME-listed front-month Ether futures contracts. VanEck’s filing is especially aggressive, seeking economic exposure to Ethereum equaling 100% of its total assets.
- ProShares: Dual Offerings
ProShares filed for two distinct Ethereum-focused ETFs, offering investors opportunities for both long and short strategies on Ether futures contracts. They include constraints ensuring that the fund’s investment in subsidiaries will not exceed 25% of the total assets.
- Grayscale: Actively Managed Fund
Grayscale’s Ethereum Futures ETF plans to hold approximately 100% of its net assets in Ether futures contracts through a Cayman Islands-based subsidiary. It may also maintain significant holdings of cash and cash equivalent investments.
The Road Ahead: Opportunities and Challenges
The sudden rush of applications highlights the rising interest in Ethereum and the potential massive capital infusion that could follow the SEC’s approval. Bloomberg analysts speculate that the ETF could unlock $30 trillion in capital. This could be a game-changer for the industry and Ethereum markets.
However, concerns regarding Ether futures liquidity levels and clarity on whether Ether is a security or commodity may pose challenges. Recent SEC crackdowns on the crypto industry add to the uncertainty surrounding these filings.
The wave of applications for Ethereum futures ETFs marks a significant milestone for the crypto industry. Firms like Volatility Shares are pioneering new paths, while others are not far behind. With the potential to go live as soon as October 2023, these filings present exciting opportunities and uncertainties. The SEC’s decisions will potentially redefine the cryptocurrency investment landscape.
