Ether futures ETF filings are stacking up, but approval may still be far off

December 1, 2021, 12:15 PM UTC

It’s Ether’s turn now—or is it?

About one month after the Securities and Exchange Commission gave the first go-ahead to a Bitcoin futures ETF, the ProShares Bitcoin Strategy ETF, also known as BITO, has already accumulated more than $1.5 billion in assets and is averaging more than 6.6 million shares traded each day. Its immediate favor from investors—it drew in $1 billion within its first two trading days—turned its debut into the largest ETF launch in history, per Bloomberg data.

Naturally, asset managers are now turning their heads toward the second most popular digital asset: Ether. While it may pale in comparison to BTC in terms of its price tag and acclaim, Ether has accumulated more than 550,000 active addresses, according to Glassnode data, and a plethora of enthusiasts are convinced that the innovation burgeoning on Ethereum blockchain will disrupt the entire financial system

Three asset managers have already filed for an Ether futures ETF with the SEC; the most recent application was submitted on Nov. 29 by Kelly Strategic Management. But investors may not want to get optimistic just yet: Two of those companies, VanEck and ProShares, withdrew their filings within mere days after they filed in August. 

The most recent filing, for what would become the Kelly Ethereum Ether Strategy ETF, trading under EX, would invest in cash-settled Ether futures contracts that trade on the Chicago Mercantile Exchange, as it’s currently the only CFTC-registered commodity exchange to offer Ether futures, according to Kelly’s filing. It would also invest assets in both pooled investment vehicles and exchange-traded products with direct exposure to Ether, according to the filing, as CME limits the number of Ether contract positions an asset manager can hold on a monthly basis.

The SEC has been slow to warm up to any type of crypto fund. The first Bitcoin ETF filing was handed to the SEC more than eight years before BITO’s approval—and the SEC still hasn’t indicated whether it will permit a fund to invest directly in any cryptocurrency anytime soon. A major concern for the SEC: There’s no official regulator to oversee crypto markets and all the global companies operating within them. Should something go wrong in the markets, the SEC might not have the authority to pull the data it deems necessary to get to the bottom of a given problem and protect investors.

But one thing is for certain: Investors are buying crypto—whether they have exchange-traded products to do it or not.

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