Seven Major Asset Managers File Ethereum ETF Applications

Asset management firms are rushing to apply for Ethereum ETFs, with analysts inferring the U.S. Securities and Exchange Commission is softening its stance toward digital assets.

The SEC has now received seven applications for exchange-traded funds (ETFs) offering exposure to Ether futures from six issuers in the past few days. Volatility Shares, the firm that launched the first 2x leveraged Bitcoin ETF (BITX) in June, led the charge on Friday.

Not to be left behind, Bitwise, Grayscale, VanEck, Roundhill, and Proshares quickly followed suit, with Proshares also applying for a second ETF that would let holders bet against Ether prices.

Eric Balchunas, senior ETF analyst at Bloomberg, tweeted that he thinks the ETFs “have a very good chance of getting approved” following the recent launch of BITX.

Ether has rallied more than 50% since the beginning of the year.

Potential SEC Softening

The new filings come after the SEC appeared to discourage applicants as recently as May.

Grayscale filed for an Ethereum ETF on May 9, prompting BitWise, Direxion, and Roundhill to follow suit. However, Grayscale withdrew its application just one week later, with its rivals doing the same shortly after. A similar scenario played out in August 2021 when VanEck and ProShares withdrew applications for Ethereum futures ETFs just a couple of days after filing them.

ETFs track the performance of an underlying asset, allowing investors to access exposure to an asset without having to hold it directly. Shares in ETFs are listed on exchanges, meaning retail traders can purchase the shares.

With ETFs offering a way for retail users to speculate on digital assets without navigating the technical complexities of crypto, analysts have long-tipped that ETFs could bolster the sector’s mainstream adoption. According to BlackRock, retail investors drove 15% of activity in US-listed ETFs during Q1 2023.

BlackRock, the world’s largest asset manager, applied for a spot Bitcoin ETF in June, also suggesting that the SEC’s stance towards crypto may be shifting,

Analysts Unpack ETF Applications

Market observers are weighing in with speculation regarding the cause for the sudden flurry of ETF applications.

James Seyffart, an analyst at Bloomberg, suggested that the SEC could be softening its stance to avoid a potential challenge from hopeful Ethereum ETF issuers.

“If any of these ETH futures ETF issuers want to… battle with SEC, SEC defenses would fail to hold up in court why BTC futures ETFs are allowed but ETH futures ETFs aren't,” Seyffart tweeted. “Wonder if SEC is now just trying to avoid losses?”

John Deaton, managing partner at Deaton Law Firm, believes the filings reflect market sentiment that following BITX, the SEC is likely to approve a spot Bitcoin ETF, improving the chances of Ethereum ETFs alongside it.

However, Lark Davis, a popular crypto influencer, disagrees that spot crypto ETFs could be around the corner and criticized the futures contracts underpinning the proposed ETFs.

“More paper garbage s**t to allow Wall Street manipulation,” Davis tweeted. “ Meanwhile, spot ETF approvals are nowhere in sight.”