Anticipation is growing among investors as the possibility of an Ethereum (ETH) exchange-traded fund (ETF) approval looms on the horizon. According to Bloomberg analysts, there is a 75% chance that such a product will be approved in the United States this year. This approval probability is the same as what was assigned to a Bitcoin futures ETF in early September 2021.
The ProShares Bitcoin Strategy ETF (BITO), the first U.S.-based fund of its kind, was launched in late October 2021 and attracted $1 billion within just two days. This success prompted many companies to seek listings for similar products. Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), expressed confidence in the investor protections provided by a futures ETF framework, further fueling interest in these investment vehicles.
Currently, there are 13 Ethereum ETF applications awaiting review by the SEC, submitted by eight different applicants including Bitwise, Proshares, and Grayscale. The first application in line for approval or denial is the Volatility Shares’ Ethereum Strategy ETF, with a deadline of October 11, based on the SEC’s schedule. Analysts believe that the SEC’s stance on cryptocurrencies is evolving, as evidenced by reports of its communication with ETF issuers. They argue that the SEC would have difficulty defending the denial of Ethereum futures ETFs after approving standard and leveraged Bitcoin futures ETFs.
In addition to the potential Ethereum ETF, there are also nine active Bitcoin spot ETF applications pending review by the SEC. The latest applicant is CBOE on behalf of the Global X Bitcoin Trust. All applications, including CBOE’s, have selected Coinbase as a surveillance-sharing partner to address concerns about market manipulation, a key issue for the SEC. So far, the SEC has denied every major spot ETF application due to these concerns.
Unlike its competitors, Grayscale is pursuing a different strategy by seeking to convert its Bitcoin trust into a spot ETF through legal action against the SEC. The company argues that the SEC’s approval of futures ETFs but not spot ETFs demonstrates arbitrary treatment. Bloomberg analysts recently increased the odds of a Bitcoin spot ETF approval this year to 65%, predicting that it may follow a court victory for Grayscale.
Overall, the possibility of both Ethereum and Bitcoin ETFs being approved in the United States is generating significant interest among investors. With the growing acceptance and recognition of cryptocurrencies, the introduction of ETFs could provide a new level of accessibility and legitimacy to these digital assets.
