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US Spot Ether ETFs Launch After Bitcoin Breakout
The first U.S. exchange-traded funds (ETFs) tied to the price of the world’s second-largest cryptocurrency, ether, began trading on Tuesday.
VanEck Ether ETF, Franklin TempletonFidelity, 21Shares and Invesco have launched on Cboe, the exchange said in a notice Friday, while a share of BlackRock will begin trading on the Nasdaq, according to a notice from the exchange.
Bitwise and Grayscale Investments products also traded on the New York Stock Exchange on Tuesday, the exchange said.
Following the launch of nine U.S. spot Bitcoin ETFs in January, the Ether products mark another victory for the cryptocurrency industry’s campaign to push digital assets into the broader financial sector, although the products are unlikely to capture the same volume of inflows, analysts said.
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The Bitcoin ETF launches were the culmination of a decade-long struggle with the Securities and Exchange Commission, which had rejected the products over market manipulation concerns.
The agency was forced to greenlight ETFs after losing a legal challenge brought by a digital asset manager Grayscale Investmentsalthough it warned when approving them that the products remained very risky.
The launch was one of the most successful in the history of the ETF market, with the products attracting $33.1 billion in net inflows through the end of June, according to data from Morningstar Direct.
Bitcoin ETF issuers have been engaged in fierce competition over fees, with many firms offering to waive fees entirely for a period of time.
Ethereum ETF fees range from 0.19% for Franklin Templeton to 2.5% for Grayscale’s existing Ethereum fund, which it is converting to an ETF, according to their public offering documents. The rest is around 0.25%.
Overall, fees are comparable to Bitcoin products, although issuers offer fewer waivers.
Grayscale is also launching a “mini” version of its Ether and Bitcoin ETFs with fees of just 0.15%.
Changes to digital asset rules
While estimates of demand for ether products vary widely, Galaxy Research, whose sister company Galaxy Asset Management has an ether ETF pending with Invesco, has forecast that ether ETFs could attract monthly inflows of $1 billion.
“Overall, market participants expect strong interest in ETH Spot ETFs and significant inflows in the first 3-6 months after launch,” said Matteo Greco, research analyst at Fineqia Internationalwrote in a note. He added that demand for Ether ETFs will be crucial in determining investor appetite for digital assets beyond bitcoin.
Issuers began filing applications for ether ETFs in September. Executives initially held out little hope that the SEC would approve the products after discouraging meetings with officials.
But the agency surprised the industry in May when it approved rule changes required for exchanges to list the products, the first of two major regulatory hurdles.
SEC Chairman Gary Gensler told Reuters last month that Grayscale’s decision influenced his thinking about approving ether products because the underlying market circumstances were similar.
- Reuters with additional editing by Sean O’Meara
Learn more:
Hong Kong set to greenlight first Bitcoin Spot ETFs
US Bitcoin ETFs generate $4.6 billion in first day of trading
South Korea Warns Against Local Brokerage of US Bitcoin ETFs
US Approval of Bitcoin ETFs a Game Changer for Crypto
Sean O’Meara
Sean O’Meara is an editor at Asia Financial. He has worked in journalism for over 30 years, having worked for local, regional and national titles in the UK as a writer, editor, page designer and news editor. A keen football, cricket and rugby fan, he has a particular interest in sports finance.