Why Another ETH Futures ETF?
According to a report by the Wall Street Journal (WSJ), Grayscale Investments filed this application on September 20. This development may come as a surprise to many, considering that the asset manager had filed an earlier application to offer this same investment vehicle. As such, this will represent its third application (Grayscale withdrew its first application due to SEC concerns before filing another one in July).
There is, however, a distinction between both applications, as WSJ noted. The latest application is filed under the Securities Act of 1933, a regulation under which spot Bitcoin ETFs like BlackRock’s filed. Meanwhile, the initial application was filed under the Investment Company Act of 1940, a regulation which securities-based ETFs are registered under.
While the exact reason for Grayscale’s action remains unknown, it may be a contingency plan in case the SEC denies its initial proposed Ethereum futures ETF, which is expected to launch in October, barring any denial.
Grayscale’s filing under the Securities Act of 1933 isn’t the first, as Brazilian investment firm Hashdex filed its Ethereum ETF application under that Act. Last week, Hashdex applied with the SEC to offer a fund that will hold both Ether futures contracts and a Spot Ethereum ETF (the first of its kind).
The firm justified this move by stating that a combination of both markets will help mitigate the risk of market manipulation.
Hashdex’s application has been singled out for how distinct it is from other applications. The investment firm has proposed to use the Chicago Mercantile Exchange (CME) to track the price of Ethereum and also plans to buy the Ether, which the fund will hold from the CME Market’s Exchange for Physical (EFP) transactions.
ETH price holding above $1,600 support | source: ETHUSD on Tradingview.com
Ethereum Futures ETF Imminent?
Several Ethereum futures ETFs are expected to hit the market in October, barring a denial by the SEC. Rule 485(a) of the SEC Rules allows these ETFs to launch 75 days from their respective filing dates if the SEC doesn’t deny them before then.
In line with this, the ETFs of fund managers like Volatility Shares, Bitwise, VanEck, ProShares, and Roundhill will be the first to launch if they receive approval from the SEC.
Volatility Shares was the first among them to apply to offer Ethereum futures ETF. As such, it will gain the first-mover advantage, carrying a possible October 12 launch date, with others coming after. However, this is subject to any decision by the SEC.
The SEC approving an Ethereum ETF will be a historical event that is expected to give the crypto market a much-needed boost as the bear market continues to linger. There are already forecasts that ETH’s price could rise above $2,000 when these funds launch.
Featured image from Analytics Insight, chart from Tradingview.com