The SEC delivered a big gift to crypto-ETF companies just before the likely government shutdown, granting approval to a number of Ethereum futures strategies that could soon begin trading.
First on its list appears to be Valkyrie Funds, which had filed an application with the regulator to add Ethereum futures to its existing portfolio. Bitcoin Strategy ETF. Another company, VanEck, announced Thursday that it would soon launch its Ethereum Futures ETF, declining to give a specific date. And according to the report of Reuters, the largest Bitcoin futures ETF store, ProShares, also got approval. This company also announced on its site that its three ETFs featuring Ethereum futures would soon be available.
This development, much like all previous indications that the SEC may move forward with approving crypto-themed funds, has led to a mass of additional product filings. Other companies that essentially I got online for approval by the SEC include the Kelly and Bitwise ETFs.
But the apparent approvals of the Ethereum futures ETF followed news that likely upset crypto fund supporters, along with the SEC. indicating further delay in the approval of Bitcoin spot products. Since Grayscale Investments’ court recently won against the SEC’s denial of its request, pressure has increased on the agency to begin approving spot Bitcoin ETFs.
“The SEC has cleared its offices ahead of the possible government shutdown, meaning delaying Bitcoin ETF spot filings while likely allowing future Ether ETFs to potentially begin trading early next week,” Roxanna Islam , head of sectoral and industrial research at VettaFi. , said in an email. “It is likely that the launch of these products will be accelerated as soon as possible, before the government shutdown.”
On Friday, Valkyrie filed an update with the SEC in which it appeared to move away from immediately launching an Ethereum futures strategy within its Bitcoin ETF.
“Effective immediately, the fund will not purchase ether futures until an amendment to the fund’s registration statement contemplating the addition of ether futures to the strategy becomes effective. principal investment of the fund. By then, the fund will unwind all existing positions in ether futures,” the company said.
While these approvals are a step forward for crypto ETF providers, it is only a minor development compared to the possible launch of spot products, the demand for which is expected to quickly eclipse that of crypto futures ETFs.
While there has been significant interest in the largest Bitcoin futures ETF, the $952 million ProShares Bitcoin Strategy ETF, advisors who want crypto funds are waiting for spot products, said Tyrone RossCEO and co-founder of Turnqey Labs.
“Financial advisors are not interested in futures ETFs. Most advisors want a spot Bitcoin or spot Ethereum ETF,” Ross said. “As far as the advisors are concerned, it’s a failure.”
There might be demand among retail investors and hedge funds, but the complex nature of futures products, in addition to the crypto asset class that many people don’t understand, makes them a difficult product to sell to advisors , did he declare.
“Crypto is hard enough. But now I have to explain a crypto futures product? Ross said, adding that fees for products can also be daunting. “From a compliance standpoint, it will be difficult to get (approval) of a product down the road.”
Ross is not a fan of crypto ETFs in any form, but said “the broader wealth management space is a little dizzying” because approvals for Ethereum futures ETFs “mean that more Pressure is being put on (SEC Chairman) Gary Gensler and we are closer to approving a cash ETF.
Since anyone who wants to hold Ethereum can do so through a U.S. exchange, the approval of futures ETFs “is kind of a nothing,” said Mike Alfred, whose hedge fund Alpine Fox focuses on Bitcoin and Bitcoin-related stocks.
“This could be bullish for Ethereum traders in the near term,” as the approvals mean another path to near-access to Ethereum, he said.
Spot products will offer lower fees than futures products, Alfred said.
“The real cost of owning a futures product is much higher,” he said. “And the risk of real asset underperformance is high.”
For example, while the price of bitcoin is up 62% so far this year, the ProShares Bitcoin Strategy ETF has returned less than 32%.
“I don’t think an approval of Ethereum futures (ETFs) is a watershed moment,” Alfred said. “If anything, it shows how retrospective the SEC is on this.”