ETH ETFs? The Race is on for the first Ethereum ETF

Six financial entities, including Volatility Shares, Bitwise, Roundhill, VanEck, Proshares, and Grayscale, are reportedly seeking approval to offer Ethereum futures exchange-traded funds (ETFs). This discovery was uncovered by James Seyffart, a research analyst within Bloomberg Intelligence.

According to James’ findings, Grayscale, Bitwise, and Roundhill initially filed for Ethereum Strategy ETFs in May 2023. During that month, the U.S. Securities and Exchange Commission (SEC) received other applications from Direxion and Valkyrie Investments.

However, the status updates showed that all filings were “withdrawn for now.”

ETH ETFs Coming Soon?

On July 28, the Ethereum ETF movement resurfaced after Volatility Shares submitted its application to the SEC. The move was quickly followed by the re-filings of Bitwise, Roundhill, and Grayscale, respectively, on August 1. Additionally, two other giants, VanEck and Proshares, joined the race on the same day.

While all the filings submitted by Grayscale, Volatility Shares, VanEck, and ProShares, focus on listing ETH futures contracts on the Chicago Mercantile Exchange (CME), there are some differences.

Grayscale’s ETF will invest in “front-month” ETH futures, which are contracts with the shortest time to maturity. Volatility Shares and VanEck’s ETFs will invest in cash-settled ETH futures.

Another key difference is the level of exposure to ETH that the ETFs will have. Grayscale’s ETF will have a 100% exposure to ETH, while Volatility Shares and VanEck’s ETFs will have lower exposure. ProShares’ ETF is a short ETF, which means that it will profit from the decline in the price of ETH.

It remains to be seen whether the SEC will approve the filings. However, the movement suggests that those major institutions are betting on the likelihood of the SEC becoming more comfortable with the idea of crypto ETFs.

Will BlackRock Join Its Peers?

While many financial entities are seeking approval for an Ethereum spot ETF, BlackRock, a leading player in the industry, has not yet joined the race. People are curious whether BlackRock will enter this promising field, as its participation could further bolster the growing trend.

The world’s largest asset manager is reportedly under investigation by the U.S. government.

According to the U.S. House Select Committee, BlackRock has invested in Chinese companies that have been blacklisted by the U.S. due to their involvement in enhancing China’s military capabilities. The Committee points out that these investments by U.S. companies could threaten national security.

The U.S. House Select Committee highlights that BlackRock and MSCI played a role in facilitating the progress of these Chinese companies. The concern is that the flow of U.S. capital into such institutions may inadvertently support activities that compromise national security.

However, BlackRock refutes any allegations of wrongdoing, stating that they offer clients a range of investment strategies, including options to invest in or exclude China from their portfolios.

Most client investments in China are through index funds, and BlackRock is among the 16 asset managers offering U.S. index funds that include Chinese companies.

The company emphasizes that all investments in China and other countries adhere to the applicable laws of the U.S. government.

Currently, the SEC is reviewing eight applications for opening spot Bitcoin ETFs, including BlackRock’s. The SEC’s historical stance, however, has been less favorable, with all previous applications being rejected.

Some experts think that having a system to monitor the market could increase the chances of getting approval for Bitcoin ETF applications. There’s hope that with BlackRock’s interest, the odds of approval for Bitcoin ETF proposals might improve. Still, recent signals from the SEC suggest that gaining approval won’t be easy.

The approval of these ETFs would be a major step forward for the legitimacy of crypto. It would make it easier for investors to get exposure to the crypto market, and it would be a bullish signal that the SEC is taking a more favorable view of crypto.