Ethereum Futures ETFs pile up applications Is the gear of the fate of crypto ETFs starting to turn?

Ethereum Futures ETFs applications increase. Are crypto ETFs about to take off?

Author: Ben Strack, Blockworks; Translation: Felix, LianGuaiNews

Previously, several institutions applied to the U.S. Securities and Exchange Commission (SEC) for Ethereum futures ETFs, but withdrew their applications earlier this year due to regulatory “hints”. Recently, several institutions have once again filed applications, which seems to indicate a change in the attitude of the U.S. SEC, 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 filed applications this week. The next deadline for the SEC to make a decision on the above applications is October 16th, and the next deadline for a decision on Volatility Shares’ application is October 11th.

According to insiders familiar with the latest Ethereum futures ETF documents, the SEC has indicated that it is prepared to publicly consider such products. However, one source added that while regulators are willing to weigh the Ethereum futures ETF, they cannot guarantee approval.

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

The willingness of the U.S. SEC to consider these products is contrary to the situation in May, when insiders said that the U.S. securities regulator had informed companies seeking Ethereum futures ETFs to stop applying. The U.S. SEC did not respond to a request for comment at the 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 U.S. 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 Asset Research at VanEck Funds, said, “The SEC’s policy on crypto ETFs has always been arbitrary, and now it is not being followed at all.”

Is the tide turning in the cryptocurrency ETF field?

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

Nate Geraci, President of The ETF Store, pointed out that over 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, and issuers are now vying for market share and trying to capitalize on it.”

The U.S. 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 the potential approval of Ethereum futures ETF.”

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 significantly outperformed its competitors in terms of assets under management, with a size of approximately $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.”

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