Ether ETFs on the Horizon as Grayscale, VanEck, and More Lodge SEC Applications

Six major asset managers are making significant moves in the cryptocurrency space as they file applications to launch Ethereum Futures exchange-traded funds (ETFs) for customers in the United States. Among the notable companies applying for ETFs are Grayscale and VanEck, along with BitWise, Volatility Shares, ProShares, and Round Hill Capital.

According to filings submitted to the U.S. Securities and Exchange Commission (SEC), Grayscale’s application comprises two proposals: a Grayscale Global Bitcoin Composite ETF and a Grayscale Ethereum Futures ETF. The latter will focus on investing in futures contracts to be traded on the Chicago Mercantile Exchange. Interestingly, Grayscale plans to prioritize “front-month” Ether futures, which are contracts with the shortest time to maturity. Additionally, Grayscale aims to “roll” Ether Futures contracts before they expire.

Volatility Shares is also in the mix, planning to list an Ethereum Futures ETF that will invest in cash-settled contracts referencing ETH trading on the Chicago Mercantile Exchange. It’s worth noting that the fund will not directly invest in Ether but intends to enter into cash-settled Ether Futures Contracts as the buyer. In such cash-settled futures markets, a counterparty pays cash to the buyer if the futures contract’s price goes up, and the buyer pays the counterparty if the price goes down.

VanEck’s filing indicates that its investment strategy revolves around ETH Futures contracts, aiming to ensure that the fund’s exposure to the value of ETH remains equal to 100% of the total assets of the fund. Consequently, any fluctuations in the value of ETH would result in proportionate changes to VanEck’s Ether ETF fund. However, it’s important to note that this could also lead to greater losses if the Fund’s exposure to the value of ETH is leveraged.

Meanwhile, ProShares introduces its Short Ether Strategy ETF, which will invest in daily contracts to profit from losses in the S&P CME Ether Futures index. The fund’s gains would mirror the index’s losses on a given day, and vice versa.

These applications follow a trend of mainstream asset management firms seeking to launch Bitcoin ETFs, with BlackRock, the world’s largest asset manager, among those looking to offer the first Bitcoin ETFs in the country. The race to secure approval for these ETFs highlights the growing interest and adoption of cryptocurrencies in traditional financial markets. Investors are closely watching the regulatory developments, anticipating the potential expansion of ETF offerings in the cryptocurrency space.

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