There is a lot of interest in Ethereum futures ETFs, as investors and issuers await regulatory approval for Bitcoin ETFs in the United States. At least five applications for Ethereum futures ETFs were filed within 24 hours on August 1, and another was submitted last week. These ETFs would invest in futures contracts of Ethereum, the second-largest cryptocurrency, rather than directly holding the underlying asset.
It remains to be seen whether the SEC will greenlight any of the current filings. However, the fact that the SEC has not asked any of the applicants to withdraw their filings is a good sign. Bloomberg ETF analyst Eric Balchunas predicts that these ETFs will likely hit the market in mid-October.
Volatility Shares, which manages $173.5 million across four ETFs, could be the first issuer of an Ethereum futures ETF.
Bitwise has re-applied for its Ethereum Strategy ETF (ETHG) after withdrawing its initial filing in May. The fund intends to invest in cash-settled, front-month ETH futures contracts, which are contracts that are settled in cash at the end of the contract period. This means that ETHG will not have direct exposure to the current spot price of Ethereum.
ETHG is classified as a “non-diversified” fund, which means that it can invest a relatively high percentage of its assets in a single security or a small number of securities. In this case, ETHG will invest up to 25% of its assets in a wholly-owned subsidiary that invests in ETH futures contracts. The remaining 75% of assets will be invested in U.S. Treasuries,
ETHG is seeking SEC approval to list on the NYSE Arca exchange. The SEC is expected to make a decision on the application by October 16, 2023.
Roundhill Investments, an SEC-registered investment adviser, is seeking to launch the Roundhill Ether Strategy ETF.
. The remaining 75% of assets would be invested in cash and cash equivalents, U.S. Treasuries, and other U.S. government obligations.
The Roundhill Ether Strategy ETF has not yet specified which exchange it intends to list on. The SEC is expected to make a decision on the application by October 16, 2023.
VanEck, which is also among the hopefuls for a spot Bitcoin ETF, is planning to go big on Ethereum. The company’s proposed VanEck Ethereum Strategy ETF would have economic exposure to approximately 100% of its total assets in ETH.
If for any reason, such as exceeded position limits or liquidity constraints, the fund is unable to achieve the target exposure, it may invest in equity securities of ETH-related companies.
In addition to ETH futures, the VanEck Ethereum Strategy ETF expects to have “significant holdings” of cash and fixed-income investments.
Proshares: Short Ether Strategy ETF and ProShares Ether Strategy ETF
ProShares, an ETF issuer, filed for two Ethereum-focused ETFs on August 1.
Similar to the Bitwise Ethereum Strategy ETF, both ProShares’ Ethereum futures ETFs seek to qualify as regulated investment companies. This means that they will not exceed 25% of their total assets in their corresponding subsidiaries, which will also be based in the Cayman Islands.
Grayscale Investments, the sponsor of the troubled Grayscale Bitcoin Trust (GBTC), filed for an Ethereum Futures ETF on August 1. The fund would be actively managed and seek to achieve its investment objective primarily through exposure to Ethereum futures contracts, purchased via a Cayman Islands-based subsidiary.
This is the second time that Grayscale has filed for an Ethereum Futures ETF. The firm submitted an initial filing in May, but then withdrew it a week later. The updated filing includes some new information, such as the fact that the fund will be actively managed and that it will hold approximately 100% of its net assets in Ethereum futures contracts.
The SEC is expected to make a decision on the application by October 16, 2023.