Following the First Bitcoin ETF, Ethereum Might be Next
The launch of the first Bitcoin futures-backed ETF in America this week has left the market buzzing with speculation about the next step. A ethereum ETF or a spot-based ETF?
Analysts believe that ETH will be the next digital asset to get an exchange-traded funds (ETF) backed. The asset, just like bitcoin, trades on the regulated futures exchange Chicago Mercantile Exchange(CME). US Securities and Exchange Commission Chair Gary Gensler previously suggested is required for any crypto-related ETFs to be approved.
We also know that the two largest ETF providers VanEck and ProShares previously submitted proposals for ethereum supported ETFs to the SEC. However, both were later asked by regulators to withdraw their applications. Other ETH-based ETF ideas are still pending with SEC. This includes one by Kryptoin Investment Advisors.
As with bitcoin, an ethereum ETF has been listed in Canada. It is provided by CI Global Asset Management. A number of other ETFs that track the price ETH can also be listed in European countries.
“I am going to launch the campaign now to get the SEC approval for an Ethereum ETF. It’s possible to get ahead of the crowd because it’s coming soon,” Scott Melker, also known for being The Wolf Of All Streets and crypto trader, said earlier in the month.
While speculation is still ongoing about an ethereum ETF being created, the new bitcoin ETF has already proven itself to be a serious threat to the Grayscale Bitcoin Trust(GBTC), which was until recently the US’s main regulated bitcoin investment vehicle.
According to Data from crypto analytics company Glassnode the Trust trades at a discount about 20% relative the bitcoin market value, which suggests that traders have stopped investing in the once-popular investment vehicle.
Mike McGlone (Bloomberg’s senior commodity strategist, noted bitcoin bull), also highlighted the large discount today, but he said that the Trust is still a more appealing option for “buy-and hold types” than futures-based ETFs.
Barry Silbert, founder and CEO of Digital Currency Group Grayscale’s parent, has repeatedly mentioned that the Trust has applied to the SEC for its shares to be converted to an ETF. Silbert reiterated this message on Twitter Tuesday. He stressed that the ETF is spot-based and not futures-based.
Grayscale could also be helping to open the door for ETFs that are based on other cryptoassets such as Bitcoin cash (BCH), Ethereum classic (ETC),, litecoin and bitcoin cash(ETC).
The report states that three of the company’s digital asset trusts, namely Grayscale Bitcoin Cash Trust, Grayscale Ethereum Classic Trust and Grayscale Litecoin Trust, have been identified as SEC reporting entities.
The trusts will be subject to the same regulations as public companies in the US and must file regular disclosures to the SEC. According to Steven Ehrlich, Forbes director of digital asset research this could indicate that the SEC is open to the possibility of crypto ETFs not being backed by CME futures contracts.
Ehrlich stated that the CME cannot offer bitcoin or ether products at the moment, but added that futures-backed ETFs could be in competition with these potential ETFs, “if the SEC opens floodgates and they are ETFs in future.”
SEC’s Gary Gensler, however, has not indicated that he would be open to “physically” backing spot ETFs for digital assets. The crypto community remains optimistic, and there is much to be discussed about the next major driver of mainstream adoption for crypto as an asset class.
At 16:50 UTC, ETH was trading at USD 4,098. It had risen by 8% and 17% respectively in a single day. In one year, the price rose by 979%.