Will These 8 Ethereum ETFs Be Approved on July 2?

Earlier this month, Bloomberg ETF analyst Eric Balchunas tweeted that based on his reporting, he believed the agency would approve Ethereum ETFs for trading on July 2. Many of Balchunas’ predictions on this topic have already come true.

Balchunas correctly predicted the approval of Bitcoin ETFs back in January, as well as several events that would lead to the approval of the ETH ETF, lending credibility to his tweets [0].

What is an Ethereum Spot ETF?

Ethereum has many features that distinguish it from Bitcoin. Its blockchain It doesn’t just host Ether coins; it’s also home decentralized apps AND non-fungible tokens which work on the Ethereum protocol. Ethereum also now uses a betting test system for creating new coins: a more energy efficient system than the work test process behind Bitcoin mining. (Ethereum also used a Proof-of-Work system until it switched to Proof-of-Stake in 2022.)

There are already strategic Ethereum ETFs on the market, which indirectly track the price of Ether using futures contracts. However, these may not track the price of the cryptocurrency as accurately as an Ethereum spot ETF and may charge higher fees. If Ethereum spot ETFs are approved on July 2, they would be the first of their kind.

Announcement

How many Ethereum ETFs could be approved?

To date, eight different ETF issuers have filed registration statements for Ethereum ETFs with the SEC.

They are listed below, along with the expected name and ticker symbol of each ETF, each ETF’s fee, and any promotional fee waivers, if such information is available. (Some issuers are filling out registration statements with blank spaces where the ETF’s fee should be listed.)

Source: SEC EDGAR system. The data is current as of June 24, 2024 and is for informational purposes only.

In the days leading up to the first Bitcoin ETF approvals in January 2024, Bitcoin ETF issuers engaged in a race to the bottom in terms of fees. Many issuers filed multiple amended registration statements, lowering their fees to try to undermine their competitors, some of whom responded hours later by filing their own amended registration statements with even lower fees.

Others have announced last-minute promotions, such as reducing fees to zero for the first six months of trading, in an effort to distinguish themselves as the cheapest Bitcoin ETF. This rapid exchange of commission cuts and promotions continued until the hours just before the SEC’s approval announcement.

Investors may see a similar rapid-fire price war between potential Ethereum ETF issuers in the coming days. With that in mind, it’s worth double-checking any information you find online about Ethereum ETF fees and promotions. Any numbers you see online may be out of date by the time you read them.

Ethereum strategic ETFs

We define a strategic Ethereum ETF as any ETF that invests at least 50% of its assets in Ethereum futures. There are seven such funds on the market today, listed below from lowest to highest commission.

Sources: fund websites. The data is updated as of June 25, 2024 and is for informational purposes only.

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What would ETF approval mean for Ethereum?

At the time of writing, the price of Ethereum has increased by around 44% this year. Would ETF approvals contribute to this momentum? This remains to be seen.

Ethereum ETFs would give 401(k) and IRA investors a new way to invest in cryptocurrencies. Americans collectively hold nearly $40 trillion in retirement accounts, and many of these retirement accounts do not themselves allow cryptocurrency trading.

In the three months following the approval of Bitcoin ETFs, the price of Bitcoin actually increased, by more than 50%. But it’s hard to say whether this was entirely due to ETF-related buying.

There is another possible explanation for Bitcoin’s rally in early 2024: the excitement that preceded the Bitcoin Halving in April. And whatever the root cause of that rally was, it didn’t last long. Bitcoin is down more than 10% in the past three months.

Ethereum ETFs vs. Ethereum Itself

Ethereum spot ETFs may have some advantages over other ways of investing in Ethereum. As we’ve discussed, they could offer investors who can’t buy Ethereum directly (such as retirement account investors) a cheaper and more reliable way to invest in Ethereum than the current slate of Ethereum strategy ETFs.

However, it is important to note that Ethereum ETFs have some disadvantages compared to owning the cryptocurrency itself. Investors in Ethereum ETFs would not receive staking rewards (a sort of interest payment or dividend to Ether holders).

If you want this feature of Ethereum, you will have to invest in the cryptocurrency itself.

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