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  • K Kim and M Bacina

SEC approves the first Ethereum Futures ETF

Updated: Dec 5, 2023

On 28 September 2023, Valkyrie Investments received a greenlight from the Securities and Exchange Commission (SEC) to launch the first Ethereum futures ETF in the US. The new product builds on top of their existing Bitcoin ETF, transforming it into a combined fund which offers both Bitcoin and Ethereum futures. Valkyrie’s chief investment officer Steven McClurg revealed that the hybrid Bitcoin and Ether Strategy ETF (BTF.O) is scheduled to launch on the following Monday. He commented:

We are thrilled to be the first to offer ether futures to our investors

McClurg further reflected the firm's recognition of the growing potential of digital assets:

Digital assets is a growing allocation across all investors, and we only expect further interest in this area

The approval was likely accelerated by concerns of potential government shutdown which would slow down operations and limit resources. SEC's Chair, Gary Gensler reflected concerns that 'the public won't have somebody, really at full force, overseeing the markets or companies that want to go public'.

The approval follows the 2021 SEC approval of the first Bitcoin-linked ETF from ProShares. Since then, there has been a rush of applications from numerous investment firms including Grayscale and Bitwise for Ethereum futures ETFs. Valkyrie Investments, BlackRock and Fidelity have also aspired to launch spot Bitcoin ETFs. However, the regulator has maintained a cautious approach towards this product type, having previously rejected Grayscale’s Bitcoin Spot ETF, due to market manipulation concerns.

Unsurprisingly, SEC has delayed its decision on a series of other Spot Bitcoin ETF applications. In particular, Ark 21 Shares spot Bitcoin ETF’s decision was postponed to early 2024, with the SEC commenting in an official statement that it requires:

Sufficient time to consider the proposed rule change…and the issues raised therein

While there has been no approved spot Bitcoin ETF to date, the recent approval of Valkyrie’s Ethereum futures ETF marks a significant milestone for the cryptocurrency industry. The regulator’s willingness to support futures-based crypto ETFs has been celebrated by the market, sparking optimism that further cryptocurrency linked ETF applications may be approved in the future.

By Michael Bacina, Kelly Kim


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