Ether Futures ETF Applications Pile Up, Is the Gear of Crypto ETF’s Fate Starting to Turn?

Ether Futures ETF Applications Accumulate, Are Crypto ETFs' Fate Starting to Change?

Author: Ben Strack, Blockworks

Translation: Felix, LianGuaiNews

Several institutions previously applied to the U.S. Securities and Exchange Commission (SEC) for an Ethereum futures ETF, but withdrew their applications earlier this year due to regulatory “hints”. Recently, several institutions have once again submitted applications, indicating a change in the SEC’s attitude, at least now willing to consider the approval of Ethereum futures ETFs.

Volatility Shares applied for an Ethereum futures ETF on July 28th, and now other companies, including Grayscale Investments, Bitwise, Roundhill Investments, ProShares, and VanEck, have also followed suit and submitted applications this week. The next deadline for the SEC to make a decision on these applications is October 16th, and the next deadline for the decision on Volatility Shares’ application is October 11th.

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According to two sources familiar with the latest Ethereum futures ETF filings, the SEC has expressed its readiness to consider such products publicly. However, one source added that while regulators are willing to weigh the pros and cons of Ethereum futures ETFs, approval is not guaranteed.

Henry Jim, an analyst at Bloomberg Intelligence, said, “From a product perspective, all ETF issuers may think that if an ETH ETF takes off, even in the form of futures, it is worth the application cost.”

The SEC’s willingness to consider these products is in contrast to the situation in May, when sources said that the U.S. securities regulator had informed companies seeking Ethereum futures ETFs to cease their applications. The SEC did not respond to requests for comment at that time.

For example, Grayscale sought to launch an Ethereum futures ETF in May, but a few days later amended a filing indicating that it no longer intended to do so. Bitwise Asset Management, Direxion, and Roundhill Investments followed suit and withdrew their applications.

After various potential issuers suspended their applications, the SEC decided to consider Ethereum futures ETFs in the past three months, which has puzzled some industry observers. The specific reasons behind the regulator’s move remain a mystery.

Matthew Sigel, Head of Digital Assets Research at VanEck, said, “The SEC’s policy on crypto ETFs has always been arbitrary, and now it’s completely inconsistent.”

Is the tide turning in the crypto ETF space?

Bradley Duke, Chief Strategy Officer of ETC Group, said in a statement that it seems that more and more people in the SEC are accepting that cryptocurrencies are an “inevitable part of the American investment landscape”.

Nate Geraci, President of The ETF Store, noted that in the past few months, sentiment around cryptocurrency-related ETFs has indeed become more positive.

Geraci said, “Overall, the tide seems to be turning in favor of ETFs related to cryptocurrencies, with issuers now vying for market share and trying to capitalize on it.”

The SEC also allowed the first leveraged Bitcoin futures ETF to be listed in June. The company behind the launch of that fund is Volatility Shares, which has also initiated the latest wave of Ethereum futures ETF applications.

Geraci said, “Volatility Shares has apparently been in direct communication with the SEC recently, and it can be reasonably assumed that Volatility Shares has seen or heard some signs of Ethereum futures ETF being approved.”

In October 2021, the SEC approved an ETF that holds Bitcoin futures contracts traded on the Chicago Mercantile Exchange (CME). The ProShares Bitcoin Strategy ETF (BITO) was the first fund launched under this approval and has far surpassed its competitors in terms of asset management, with assets under management of about $1 billion.

Geraci said, “The US SEC allows ETFs to hold Bitcoin futures traded on the CME, but does not allow ETFs to hold Ethereum futures traded on the CME, which seems illogical.” “Given the history of applications related to crypto ETFs, it is difficult to speculate on how the SEC will respond.”

Related reading: Analysis of Bitcoin ETFs: 5 Futures ETFs with total assets of nearly $1.3 billion, how much impact does the news of Bitcoin ETF applications have?

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