Ethereum ETFs Receive SEC Nod: Trading Kicks Off on July 23
ETFs based on Ethereum have been approved in the US but their launch timing remains unclear. In the meantime, let's see how to invest in them. l Credit: Mario Tama/Getty Images
Key Takeaways
- The US SEC has given preliminary approval to Ethereum exchange-traded funds (ETFs) issuers.
- Issuers have filed updated proposals, and the launch date has been set for Jul 23.
- Here’s a list of all ETFs to be traded in the US.
After the US Securities and Exchange Commission (SEC) approved exchange-traded funds (ETFs) based on Ethereum (ETH) in May, US investors began to anticipate when these investment opportunities would become available.
Now, a specific launch date has been set for Jul 23, 2024, and potential investors should understand ETH ETFs, how they work, and where they will be available before making any investments.
How to Buy ETH ETF
ETFs are a good option for investors who think about Ethereum but are hesitant to dive into directly buying cryptocurrency. To invest in this kind of asset, traders must first find a reputable brokerage firm that allows ETF trading.
Then, users should open an account by providing identification and depositing funds for the investments. After that, users must research and select the Ethereum ETF that aligns with their investment goals. Finally, they can purchase shares of the chosen ETF just like if they’re buying stocks.
Understanding Ethereum ETFs is crucial. There are two main types: spot ETFs, which hold actual Ethereum and mirror its price movements, and futures ETFs, which track the price of Ethereum using futures contracts, offering exposure without directly holding the asset.
Ethereum ETFs may represent a convenient and potentially cost-effective way to invest in Ethereum. They simplify the investment process by bypassing the complexities of cryptocurrency wallets and exchanges. Purchasing ETFs may also incur lower fees compared to directly buying cryptocurrency. However, the investment value will reflect the rise and fall of Ethereum’s price.
While traders are waiting for Ethereum ETFs to be available in the US, some of them already trade on global exchanges, including the 21Shares Ethereum ETF and the 3iQ CoinShares Ether Feeder ETF , which are available in Australia. Others are available in Hong Kong.
Ethereum Fund Details
Ethereum funds are private investment vehicles providing institutional-quality exposure to Ether. They cater to institutional investors seeking exposure to Ethereum through traditional investment vehicles. The funds hold ETH directly, mirroring its price movements. They offer simplified management by outsourcing trading, operations, finance, and secure custody of Ethereum assets.
The investment strategy focuses on holding ETH, allowing investors to participate in Ethereum’s price performance while minimizing administrative burdens. ETH funds are offered by institutional managers who can also provide institutional-grade security for crypto assets.
The funds aim to simplify the complexities of investing in digital assets by offering investors outsourced trading, operations, finance, and custody/digital asset private key protection services. This makes buying and holding ETH easier, as institutional managers offering these investments have access to professional trading solutions, custody partners, and reputable service providers.
The fund’s principal investment strategy is to invest in Ethereum. This enables investors to gain exposure to ETH’s price movements through a traditional investment vehicle while seeking to minimize administrative costs. A top-tier crypto asset custodian safeguards the funds’ ETH.
U.S. Spot Ethereum ETFs List
Here’s a list of Spot Ethereum ETFs – and related assets and starting fees – available in the US:
| Name (Ticker) | Starting Fee | Waiver Duration | Post-Waiver Fee |
|---|---|---|---|
| Grayscale Ethereum Trust (ETHE) | 2.5% | N/A | 2.5% |
| Grayscale Ethereum Mini Trust (ETH) | 0.0% | Six months or first $2 billion of assets. | 0.15% |
| Franklin Ethereum ETF (EZET) | 0.0% | Until 01/31/25 or the first $10 billion of assets. | 0.19% |
| VanEck Ethereum ETF (ETHV) | 0.0% | One year or after the first $1.5 billion of assets. | 0.20% |
| Bitwise Ethereum ETF (ETHW) | 0.0% | Six months or after the first $0.5 billion of assets. | 0.20% |
| 21 Shares Core Ethereum ETF (CETH) | 0.0% | Six months or after the first $0.5 billion of assets. | 0.21% |
| Fidelity Ethereum Fund (FETH) | 0.0% | Until 12/31/24 with no limit on assets. | 0.25% |
| iShares Ethereum Trust (ETHA) | 0.12% | Twelve months or after the first $2.5 billion of assets. | 0.25% |
| Invesco Galaxy Ethereum ETF (QETH) | 0.25% | N/A | 0.25% |
ETH ETF Launch Details in Full
On May 23, the SEC approved applications from Nasdaq, CBOE, and NYSE to list spot ETH ETFs. This was a surprising win for the cryptocurrency industry, which had expected rejections after discouraging meetings with the regulator.
At that time, according to chair Gary Gensler, the timing for these ETFs largely depends on how quickly issuers respond to the SEC’s queries. The regulator’s chairman informed US senators that final approvals for ETFs trading Ethereum would have been anticipated to be completed this summer.
When questioned by the Senate, Gensler avoided classifying Ethereum as either a security or a commodity. He sidestepped the issue, stating that the agency had only “partially” approved Ethereum ETFs without further clarification.
During a Senate Appropriations Committee subcommittee hearing, SEC Chair Gary Gensler said that the approval process for Ethereum ETFs was progressing “smoothly” following the initial approval of a batch of such ETFs.
Latest Developments
The Chicago Board Options Exchange (CBOE) recently announced the launch date for Spot Ethereum ETFs, confirming that five Spot ETH ETFs will begin trading on Tuesday, Jul 23, 2024.
The CBOE Ethereum ETFs included 21Shares Core Ethereum ETF (CETF), Fidelity Ethereum Fund (FETH), Franklin Ethereum ETF (EZET), Invesco Galaxy Ethereum ETF (QETH), and VanEck Ethereum ETF (ETHV). VanEck confirmed the trading start date in a separate communication.
The final confirmation arrived from the SEC. Among the eight firms that applied, at least two, including BlackRock and VanEck, have received the financial regulator’s authorization to launch their products. These ETFs will be available on three major exchanges: CBOE, Nasdaq, and NYSE, all ready for the debut.
Documents filed with the SEC reveal that NYSE Arca has approved the registration and listing of spot Ethereum ETFs from Grayscale and Bitwise under the Exchange Act of 1934.
Grayscale stands out with a higher main product fee of 2.5%. But its Mini Ethereum Trust aligns with others at 0.25%. BlackRock, Fidelity, and Grayscale set fees at 0.25%, 21Shares at 0.21%, Bitwise, VanEck, and Invesco Galaxy at 0.2%, and Franklin Templeton at 0.19%. ProShares has yet to disclose its fee. The SEC also approved 19b-4 forms for Grayscale’s mini Ethereum product on Wednesday, working with NYSE Arca to list the products.
Issuers Also Offer Waivers
To attract early investors, several issuers of ETH ETFs plan to waive their fee for up to six months or until the funds reach certain sums—in 21Shares’ case, for example, $500 million in assets—whichever comes first.
VanEck announced a 0.20% fee for its Ethereum ETF. The fee will be waived for up to a year or until the fund reaches $1.5 billion in assets. Franklin Templeton set its fee at 0.19%, while Invesco and Galaxy opted for 0.25%.
The fee competition among Ethereum ETF issuers resembles the earlier launch of spot Bitcoin ETFs. Analysts expect this trend to continue as issuers compete for market share in this new investment vehicle.
