Will These 8 Ethereum ETFs Be Approved on July 2?

Earlier this month, Bloomberg ETF analyst Eric Balchunas tweeted that, based on his reporting, he believed the agency would approve Ethereum ETFs for trading on July 2. Several of Balchunas’s predictions on this topic have already come true.

Balchunas correctly predicted the approval of Bitcoin ETFs back in January, as well as several events leading up to an ETH ETF approval, giving his tweets credibility ^[0]

Ethereum has many features that distinguish it from Bitcoin. Its blockchain doesn’t just host Ether coins; it’s also home to decentralized apps and non-fungible tokens that run on the Ethereum protocol. Ethereum also now uses a proof-of-stake system to create new coins — a more energy-efficient system than the proof-of-work process behind Bitcoin mining. (Ethereum also used a proof-of-work system until it switched to proof-of-stake in 2022.)

There are already Ethereum strategy ETFs on the market, which indirectly track the price of Ether using futures contracts. However, these may not track the cryptocurrency’s price quite as accurately as a spot Ethereum ETF would, and they may charge higher fees. If spot Ethereum ETFs are approved on July 2, they’d be the first of their kind.

To date, eight different ETF issuers have filed registration statements with the SEC for Ethereum ETFs.

They are listed below, along with the expected name and ticker symbol of each ETF, each ETF’s fee and any promotional fee waivers, if that information is available. (Some issuers are filing registration statements with blank spaces where the ETF’s fee should be listed).

Source: SEC EDGAR system. Data is current as of June 24, 2024 and for informational purposes only.

In the days leading up to the first Bitcoin ETF approvals in Jan. 2024, Bitcoin ETF issuers engaged in a race to the bottom in terms of fees. Many issuers filed multiple amended registration statements lowering their fees to try to undercut their competitors, some of whom responded hours later by filing their own amended registration statements with even lower fees.

Others announced last-minute promos — such as reducing their fee to zero for the first six months of trading — in an effort to distinguish themselves as the cheapest Bitcoin ETF. This fast-paced exchange of fee cuts and promos continued into the hours just before the SEC’s approval announcement.

Investors may witness a similar rapidfire price war between prospective Ethereum ETF issuers in the days ahead. With that in mind, it’s worth double-checking any information you find online about Ethereum ETF fees and promos. Any numbers you see online could be outdated by the time you read them.

We define an Ethereum strategy ETF as any ETF that invests at least 50% of its assets in Ethereum futures. There are seven such funds on the market today, and they’re listed below from lowest to highest fee.

Sources: Fund websites. Data is current as of June 25, 2024 and for informational purposes only.

The price of Ethereum is up about 44% this year at the time of writing. Would ETF approvals add to that momentum? That remains to be seen.

Ethereum ETFs would give 401(k) and IRA investors a new way to invest in crypto. Americans collectively hold nearly $40 trillion in retirement accounts, and many of those retirement accounts do not allow trading of cryptocurrencies themselves.

In the three months after Bitcoin ETFs were approved, the price of Bitcoin did rise — by more than 50%, in fact. But it’s hard to say whether this was entirely due to ETF-related buying.

There’s another potential explanation for Bitcoin’s rally in early 2024: the hype leading up to the Bitcoin halving in April. And whatever the biggest cause of that rally was, it didn’t last long. Bitcoin is down more than 10% over the last three months.

Spot Ethereum ETFs could have some advantages over other ways of investing in Ethereum. As we’ve discussed, they could offer investors who cannot buy Ethereum directly (such as retirement account investors) a cheaper and more reliable way to invest in Ethereum than the existing slate of Ethereum strategy ETFs.

However, it’s important to note that Ethereum ETFs do have some disadvantages compared to owning the cryptocurrency itself. Ethereum ETF investors would not receive staking rewards (a sort of interest payment or dividend for Ether holders).

If you want that feature of Ethereum, you’ll need to invest in the cryptocurrency itself.