The U.S. Securities and Exchange Commission’s (SEC) recent green light for Ethereum-based exchange-traded funds (ETFs) reinforces Ethereum’s classification as a non-security. This observation was highlighted by Brian Quintenz, the former Chairman of the CFTC and currently the Head of Policy at a16z Crypto, in a post on X today.
On October 2, nine ETF products were launched that are anchored to futures contracts pegged to Ethereum’s native token, Ether’s, value. Out of these nine, five are purely tethered to Ether futures. The other four ETFs offer a blend, reflecting both Bitcoin and Ethereum futures contracts.
In related developments, Grayscale has expressed intentions to transition its Ethereum Trust into a spot Ethereum ETF.
Ethereum ETFs Saw Less Than $2 million in Total Trading Volume on Day 1
Of the newly introduced ETFs, Valkyrie’s BTF, which encompasses both Bitcoin and Ether, topped the list with a notable trading volume of $882,000.
Interestingly, BTF isn’t entirely new to the crypto ETF space. Since October 2021, it operated as a Bitcoin-only futures ETF but later evolved its approach to integrate Ethereum.
Drawing a comparison between the inaugural trading volumes of these Ethereum-centric ETFs and the ProShares Bitcoin Strategy ETF (BITO) from October 2021 reveals a stark contrast in market reception.
On its launch day, BITO experienced a staggering trading volume exceeding $1 billion, underlining the more muted response the Ethereum ETFs have received so far.
Eric Balchunas, a seasoned ETF analyst at Bloomberg, provided some perspective on the situation. He commented that although the trading volumes of Ether ETFs might appear lackluster, especially when juxtaposed with their Bitcoin counterparts, these numbers are still significant in the context of standard financial ETF debuts.
Furthermore, Balchunas emphasized that investors typically show a preference for spot ETF products over those tethered to futures contracts, which could explain the more muted response to the Ether-based products.
He also shed light on a strategic move by the SEC. By launching all these ETFs simultaneously, the SEC aimed to ensure no single fund would overshadow or dominate the market right out of the gate.
Volatility Shares Cancels Plans to List ETH Futures ETF
While the momentum around Ether futures and ETFs is palpable, certain companies are treading with caution.
For instance, Volatility Shares, a known ETF provider, recently decided to shelve its plans for a comparable product, stating that the current landscape didn’t present adequate opportunities.
The green light for Ethereum ETFs by regulators is an undeniable milestone in the unfolding journey of the cryptocurrency domain.
The ex-chairman of the CFTC didn’t mince his words on the matter:
“We’ve waited an exorbitant amount of time to reach this point, which is both frustrating and belittling. Nonetheless, this is a monumental achievement not just for the crypto realm, but more crucially, for the forthcoming era of the internet.”