Ether Futures ETFs Become The Latest Craze as Firms Race for SEC Approval

Updated: 03 August 2023

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Fund managers are racing to launch Ether futures ETFs with at least half a dozen applications submitted to the Securities and Exchange Commission since Friday.

Volatility Shares was first off the starting blocks with an application on Friday and on Tuesday came five more filings from Bitwise, Roundhill, VanEck, Proshares, and Grayscale.

The development follows the launch last month of Volatility’s leveraged Bitcoin futures ETF and also comes hard on the heels of an application by BlackRock, the world’s biggest money manage with assets of about $9 trillion, to launch a spot Bitcoin ETF. Other firms vying to launch spot Bitcoin ETF’s include Fidelity, Cathie Wood’s Ark Invest, Invesco, VanEck, and WisdomTree.

Because the SEC has already approved Bitcoin futures ETFs, the chances of approval for Ether futures ETF are considered much greater than for a spot vehicle. The rush for approvals came after the SEC informed asset managers that it is ready to review such applications, the Wall Street Journal reported.

We officially have 5 different #Ethereum futures ETF filings submitted to the SEC. Would love to know what has changed since May, other than the fact that someone (Volatility Shares) applied on Friday. ProShares went straight for the inverse/short ETF. https://t.co/Qi8he0OwrU pic.twitter.com/qVVUwrUjOI

— James Seyffart (@JSeyff) August 1, 2023

Ether Futures ETF Applications Fuelled by Volatility’s Bitcoin Win

If approved, the ETFs would invest in futures contracts of Ethereum traded on the Chicago Mercantile Exchange (CME), regulated by the Commodity Futures Trading Commission(CFTC).

Unlike Spot ETFs, future ETFs are shielded from market volatility and price swings making them less risky. The SEC is yet to approve a spot ETF and considers the actual asset to be unregulated, prone to manipulation and lacking needed investor protections.

In its filing to the SEC, GrayScale has made two applications, one for a Grayscale Global Bitcoin Composite ETF and the other for a Grayscale Ethereum Futures ETF. For the latter, Grayscale’s fund would invest largely in “front-month” Ether futures since they have the shortest time to maturity. The firm also stated that it will trade out of any Ether futures contracts that were about to expire.

This is GrayScale’s second application this year after it made a similar one in May that was later withdrawn. Bitwise also withdrew an earlier application.

The new wave of applications is fueled by Volatility Shares’ success in an earlier application that led it to launch a 2X Bitcoin Futures ETF in June. By approving the application SEC sparked hope that an Ethereum futures ETF had a better chance of approval.

SEC Now Ready for Ether Futures ETFs

Blockworks also reported that two SEC sources had confirmed the regulator is ready to considering Ether futures ETFs but cautioned that approvals are not guaranteed.

The US SEC is reportedly considering an Ethereum futures ETF, reveals Blockworks, citing industry insiders. Perception around crypto ETFs has warmed up since BlackRock's Bitcoin spot ETF application. Nate Geraci, CEO of ETF Store, suggests it would be illogical for the SEC to…

— BitcoinWorld Media (@ItsBitcoinWorld) August 3, 2023

“I doubt all these issuers would file at the same exact time if there weren’t at least a meaningful chance at approval,” said Bloomberg Intelligence ETF analyst James Seyffart.

If the SEC takes a favourable stance on the latest applications for Ethereum futures-based ETFs, they would go live in 75 days from the date of filing. This would mean that Volatility Shares’ Ether Strategy ETF could launch on October 12, followed by the debut of Grayscale, Bitwise, Roundhill, and ProShares ETFs on October 16.

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