The cryptocurrency world has its fair share of critics, skeptics, and naysayers. Regardless of obstacles, the cryptocurrency bandwagon continues to gain significant momentum.
Bridging the gap between the traditional and decentralized financial worlds, Exchange-Traded Funds (ETFs) tied to various cryptocurrencies continue to enter the fray. In the latest development, we might see yet another pivotal moment for the crypto landscape: The approval of Ether Futures ETFs for trading within the US.
On December 17, Bloomberg reported the US Securities and Exchange Commission (SEC) is poised to stamp approval on Ether Futures ETFs. The race to file for approval began earlier this year following the recent fervor surrounding Bitcoin Spot ETFs.
A Surge in ETF Applications
The SEC has been busy dealing with a surge of applications for new ETFs. The momentum began with the Volatility Shares Ether Strategy ETF. Volatility Shares filed its application on July 28, 2023, for the Ether futures ETF after attracting a lot of attention by being the entity behind the first leveraged crypto ETF in the US through its 2x Bitcoin Strategy ETF (BITX) gaining approval.
By August 1, several other asset managers foraying into the cryptocurrency landscape filed applications for ETFs tied to digital assets. Some of the notable applications include:
- Bitwise Ethereum Strategy ETF
- VanEck Ethereum Strategy ETF
- Roundhill Ether Strategy ETF
- ProShares Short Ether Strategy ETF
- ProShares Ether Strategy ETF
- Grayscale Ethereum Futures ETF
Historically, there has never been a strong precedent when it comes to ETFs tied to cryptocurrencies. The SEC has already considered and rejected around ten similar applications submitted in the past. However, the Bloomberg report indicating an impending approval signals a potential shift in the SEC’s outlook on crypto-based ETFs.
Is a Flurry of Ether ETF Application Approval Happening?
If the SEC entertains these applications and refrains from denying them, the markets might see Ether futures ETFs soon. Considering the standard processing time the securities watchdog takes, Ether futures ETFs can hit the market 75 days after respective filing dates.
Being the first to apply, Volatility Shares might be looking at a tentative launch date as early as October 12, 2023, for the Volatility Shares Ether Strategy ETF. If approval goes through, the rest will follow suit.
This emerging timeline bears semblance to the enthusiastic reception garnered by spot Bitcoin ETFs, which surged in popularity after a slew of applications were filed, particularly with BlackRock leading the charge.
A Growing Queue of Crypto ETFs
Speaking of Bitcoin ETFs, the ARK 21Shares Bitcoin ETF has taken the lead in this queue, accompanied by the likes of BlackRock’s iShares Bitcoin Trust, Bitwise’s Bitcoin ETP Trust, Fidelity’s Wise Origin Bitcoin Trust, WisdomTree Bitcoin Trust, VanEck Bitcoin Strategy ETF, Invesco Galaxy Bitcoin ETF, and Valkyrie’s spot Bitcoin ETF. Each entry is poised to bring its own perspectives to the market, adding to the growing tapestry of traditional financial instruments tied to cryptocurrencies.
The approval for Ether Futures ETFs will mean the funds will join the ranks of Bitcoin Futures ETFs already trading on the market. Some of the most prominent funds tied to Bitcoin derivatives include:
- ProShares Bitcoin Strategy ETF (BITO)
- ProShares Short Bitcoin ETF (BITI)
- VanEck Bitcoin Strategy ETF (XBTF)
- Valkyrie Bitcoin Strategy ETF (BTF)
- Simplify Bitcoin Strategy PLUS Inc. ETF (MAXI)
- Global X Blockchain & Bitcoin Strategy ETF (BITS)
However, it is important to note that all of these are still only tied to cryptocurrency derivatives, not the physical cryptocurrencies themselves. In that regard, BlackRock’s application for the first spot Bitcoin ETF and Grayscale’s lawsuit against the SEC for its ETF conversion might be critical.
Grayscale’s Bitcoin Spot ETF Conversion Lawsuit
As the landscape for crypto ETFs develops, Grayscale, a subsidiary of Digital Currency Group (CoinDesk’s parent company), has advocated for equitable treatment of all applicants.
Grayscale’s legal pursuits, including a lawsuit against the SEC’s denial of its ETF conversion, exemplify the complexities and legal battles that can shape the trajectory of crypto ETF approvals. Regarding a verdict on its lawsuit against the SEC, the expected date for the verdict was August 15, 2023. However, no verdict has been announced so far.
Meanwhile, Grayscale has already started hiring under the premise that approval is likely. Additionally, the company contends that if the SEC were to approve any spot Bitcoin ETF applications, it should do so simultaneously for all applicants, ensuring fair competition.
The Odds of Bitcoin Spot ETF Approval
While a few major industry commentators like John Reed Stark, a former SEC official, claim the chances of approval are slim, the securities watchdog looks increasingly likely to give a green light.
If Grayscale’s lawsuit ends with a verdict in its favor, the SEC will have no choice but to give blanket approvals for all Bitcoin Spot ETF applications.
So far, the agency seems determined to postpone any decisions regarding approvals for physically-backed cryptocurrency ETF. However, cryptocurrency enthusiasts should keep their eyes and ears open.
Even if approvals on spot Bitcoin ETFs seem likely to happen in 2024, you cannot rule out any surprises.
As the crypto ETF landscape evolves, excitement and uncertainty dance in tandem. The ongoing saga of Ether futures ETFs joins the narrative of evolving regulatory landscapes and shifting investor sentiment.
This multifaceted interplay could potentially redefine how cryptocurrencies integrate into mainstream investment, but the outcome remains enshrouded in regulatory intricacies.
As we continue to witness this unfolding chapter, the crypto community stands poised for further transformations that could reshape the investment sphere for years to come.
Black Book Crypto is keeping an eye on the future of Ether futures ETFs and spot Bitcoin ETFs to update you as soon as the next chapter in this saga unfolds.
