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Valkyrie looks to launch an Ether futures ETF as soon as Tuesday
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(Kitco News) - Amid the focus on the Securities and Exchange Commission’s (SEC) decision to delay multiple spot Bitcoin ETF applications, Ether (ETH) could see its first futures ETF listing as soon as Tuesday based on recent activities by several asset managers, including Valkyrie.
On August 16, Valkyrie filed an application with the SEC for a fund offering exposure to Ether through ETH futures contracts.
A Valkyrie spokesperson originally stated that starting on October 3, the Bitcoin Strategy ETF will allow investors access to Ether and Bitcoin futures “under one wrapper,” making it one of the first firms to do so.
The jockeying has begun in full as Valkyrie announcing they are buying Ether futures for $BTF today (ahead of formal name change on Tue). In related news, hearing that some issuers are ready to launch Monday morning, unclear how many yet, but at least a couple. Game on. https://t.co/I1FiVU58RZ
— Eric Balchunas (@EricBalchunas) September 28, 2023
On Friday, Bloomberg Intelligence ETF analyst Eric Balchunas provided an update on the developments with Valkyrie, showing that the firm has announced a pause in its activities while it waits for an amendment to the fund’s registration statement to take effect.
“The plot thickens, Valkyrie just put out 497 that they are, in fact not going to buy Ether futures until they are live (probably Tue) and are going to sell the ETH futures they bought (in an effort to jump the line a bit),” he said. “SEC must have threatened them to cut it out.”
This development was verified in a press release from Valkyrie on Friday afternoon.
“Valkyrie Funds has ceased purchasing and has unwound any Ether futures contracts positions until effectiveness of an amendment to the Valkyrie Bitcoin Strategy ETF’s registration statement contemplating the addition of Ether futures contracts to the principal investment strategy of the Fund,” the release said. “Valkyrie expects that effectiveness will occur upon the earlier of October 3, 2023, or the time at which the SEC accelerates effectiveness of the registration statement. Prior press statements regarding the addition of Ether futures contracts into the Valkyrie Bitcoin Strategy ETF should be disregarded at this time.”
But it's not just Valkyrie that is looking to get in on the Ether ETF game. “ProShares looks ready to rock with three Ether ETFs on Monday (all priced at 95bps).. they join Bitwise (with two ETFs at 85bps) and VanEck (with one at 66bps),” Balchunas tweeted. “So that leaves us with a total of 6 ETFs (so far) in the Monday horse race.”
On Thursday, VanEck announced the upcoming launch of the VanEck Ethereum Strategy ETF (EFUT), an actively managed ETF designed to seek capital appreciation by investing in Ether futures contracts.
According to the press release from VanEck, “EFUT does not invest in ETH or other digital assets directly.” Instead, the fund will “invest in standardized, cash-settled ETH futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission.”
To help provide a little clarity around the growing number of applications, Seyffart tweeted the following list, saying, “Here's the full list for Ethereum funds that we think are launching on Monday. There could be more filers today still.”
Ether-related ETF filings. Source: Twitter
There are currently 15 Ether futures ETFs from nine issuers vying to launch.
While the posturing and delays from the SEC were expected, the majority of analysts say it's only a matter of time before a variety of crypto-related ETFs get approved.
“As we've been saying both with ETH futures, but especially with spot Bitcoin, it will be a marketing war like we've never seen since they all do [the] same thing and launch on [the] same day,” said Balchunas. “Unprecedented.”
“For the first time ever, ETH futures are on the table on the back of the SEC giving Valkyrie Funds the green light to start adding Ethereum futures to its existing Bitcoin futures ETF,” said Akash Mahendra, Director of Haven1 Foundation. “The approval of an ETH futures ETF represents a monumental breakthrough for the world’s second-largest cryptocurrency. This landmark decision by the SEC not only showcases Ethereum’s rising prominence, but also signals a profound shift in the regulatory landscape.”
Mahendra said the key differentiator between spot and futures ETFs “is that spot ETFs allow investors to purchase the underlying asset without the need to own it, while futures ETFs grant access to futures contracts, rather than direct ownership of the asset.”
“With the green light for ETH futures ETFs, we now enter a new era where Ethereum becomes increasingly mainstream,” he said. “While these futures ETFs may not have an immediate impact as substantial as spot ETFs, it’s undeniable that it marks a crucial step forward.”
“And the change is not limited to Ethereum alone - it extends to the entire industry and serves as a clear indicator of growing institutional interest,” Mahendra said. “This move, coupled with the upcoming Bitcoin halving in April next year, could be one of many bullish signs for the market.”
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