The recent endorsement of Ethereum exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) has officially confirmed Ethereum’s classification as a non-security. Brian Quintenz, former CFTC Chairman and Head of Policy at a16z Crypto, shared this insight on X today.
On October 2, a total of nine ETF products, created to monitor futures contracts associated with the value of Ethereum’s native currency, Ether, were introduced to the market. Among these, five are exclusively focused on Ether futures, while the remaining four track a combination of Bitcoin and Ethereum futures contracts.
Additionally, Grayscale is actively pursuing the transformation of its Ethereum Trust into a spot Ethereum ETF.
Ethereum ETFs Saw Less Than $2 million in Total Trading Volume on Day 1
Among the recently launched ETFs, Valkyrie’s BTF, which tracks a combination of Bitcoin and Ether, took the lead with a total trading volume of $882,000.
It’s noteworthy that BTF initially operated as a Bitcoin-only futures ETF since October 2021 but later modified its strategy to include Ethereum.
When comparing the initial trading volumes of these Ether ETFs to the debut of the ProShares Bitcoin Strategy ETF (BITO) in October 2021, it’s evident that Ethereum’s reception has been less exuberant. BITO, on its first day, witnessed a trading volume exceeding $1 billion.
Eric Balchunas, a senior Bloomberg ETF analyst, observed that although the trading volume of Ether ETFs may appear modest, it is relatively significant when compared to the typical launches of traditional finance ETFs.
However, he pointed out that investors generally have a preference for spot ETF products as opposed to those based on futures contracts.
Balchunas also drew attention to the SEC’s strategic decision to launch all these ETF products on the same day. This move was intended to prevent any single fund from gaining market dominance, thus promoting competition and diversity within the ETF market.
Volatility Shares Cancels Plans to List ETH Futures ETF
Despite the increasing interest in Ether futures and ETFs, some firms are exercising caution when it comes to entering this market. For instance, Volatility Shares, an ETF provider, recently decided to abandon its plans to list a similar product, citing a lack of viable opportunities in the current financial landscape.
As the cryptocurrency market continues to undergo changes and developments, the approval of Ethereum ETFs represents a significant milestone in terms of regulatory progress. The former chairman of the CFTC also expressed his views on this matter:
“It’s absurd and frustrating that it took this long to reach this point, but it’s a substantial victory for the cryptocurrency space and, more importantly, for the future of the internet.”