Today, the Nashville-based financial company, Valkyrie Investments, received the green light from the U.S. Securities and Exchange Commission (SEC) to roll out the first-ever ETF centered on Ethereum futures. This development could signify a pivotal moment for digital asset investments in the U.S.
The nod from the SEC is indicative of the regulator’s gradually warming stance towards the cryptocurrency domain. In October 2021, the SEC sanctioned the trading of Bitcoin ETFs based on futures contracts. Now, Valkyrie Investments joins an elite cluster of entities providing cryptocurrency-focused ETFs, adding to its current Bitcoin Mining ETF portfolio.
Rising Competition in the Ether ETF Space
Valkyrie Investments isn’t the only player eyeing the establishment of Ethereum futures ETFs. Several other proponents, such as VanEck, Grayscale Investments, and Bitwise, have lodged their proposals with the SEC. These companies aim to tap into the escalating demand for Ethereum, now recognized as the globe’s second most valuable cryptocurrency.
Besides the Ethereum futures ETFs, Valkyrie Investments, in conjunction with Wall Street heavyweights like BlackRock and Fidelity, is also venturing into the realm of launching a spot Bitcoin ETF. This kind of ETF would provide a wider range of investors access to the immediate price of Bitcoin rather than its anticipated future value — a benefit presently reserved for certified investors.
However, the SEC has so far shown caution in sanctioning this particular ETF model, pointing to regulatory apprehensions.
Accelerated Approval Amid Government Shutdown Concerns
Valkyrie originally aimed to launch its fund on October 3. Yet, the looming threat of a U.S. government shutdown spurred the SEC to expedite the approval process for Ethereum futures ETFs. A stalemate in Congress over budget agreements could halt most government functions, impacting nearly two million federal employees and potentially interrupting SEC operations.
In a conversation with Fox Business, Valkyrie’s Chief Investment Officer, Steven McClurg, conveyed his gratitude for the SEC’s resolution.
“We’re elated to pioneer the offering of ether futures to our clientele, especially given the surged interest in the asset in the recent times,” he commented.
Valkyrie aspires to transition its current Bitcoin futures ETF into a hybrid fund, presenting futures for both Bitcoin and Ethereum, with trading operations slated to kick off immediately.
The quickened approval process of the SEC suggests the agency’s proactive approach to ensure market equilibrium amidst a potential government shutdown. Just earlier this week, the SEC postponed verdicts on other spot Bitcoin ETF applications, one of which belongs to Ark 21Shares, a fund associated with tech aficionado Cathie Wood.
Legislatively speaking, SEC Chairman Gary Gensler encouraged firms intending to go public to fast-track their initiatives, anticipating the potential government standstill. Such a shutdown would necessitate the SEC to function with a limited staff, hindering its capability to supervise market dynamics and public listings.
The green light given to Valkyrie Investments for their Ethereum futures ETF signifies further progression and maturity of the crypto sphere in the U.S. While the SEC’s cautious approach, especially towards spot ETFs, remains evident, they’ve displayed a readiness to welcome futures-oriented products.
As other entities queue up with analogous offerings, the competitive landscape in the Ether ETF sector is poised to heat up.