The US Securities and Exchange Commission (SEC) is reportedly preparing to approve the launch of several Ethereum futures exchange-traded funds (ETFs) as early as next week, according to Bloomberg analysts. This would mark the first time that investors in the US could gain exposure to the second-largest cryptocurrency by market capitalization through a regulated product.
Ethereum Futures ETFs Could Launch Before Government Shutdown
Bloomberg Intelligence analyst James Seyffart revealed on X (formerly known as Twitter) that the SEC might greenlight several Ethereum futures ETFs as early as next week. Seyffart’s remarks came in response to fellow ETF analyst Eric Balchunas, who suggested that the SEC is keen to fast track approval. Balchunas added that the SEC aims to clear the Ether futures ETFs from its agenda before the potential US government shutdown. He mentioned that various filers have been advised to update their documents by Friday afternoon to enable trading by Tuesday of the following week.
The US government might shut down at 12:01 a.m. ET on Oct. 1 if Congress fails to agree on or provide funding for the new fiscal year. Any cash crunch may impact the country’s financial regulators, among other federal agencies.
15 Ethereum Futures ETFs from Nine Different Applicants
While neither analyst disclosed their sources, they did note that 15 Ethereum futures ETFs from nine different applicants are currently in the approval pipeline. Companies such as VanEck, ProShares, Grayscale, Volatility Shares, Bitwise, Direxion, and Roundhill have all proposed Ethereum futures or hybrid ETF products. In a note on Sep. 27, the analysts gave a 90% probability for the launch of Ethereum futures ETFs in October. They also highlighted that Valkyrie’s Bitcoin futures product is set to become the first to include Ethereum exposure, with trading expected to commence on Oct. 3.
“We expect pure Ethereum futures ETFs to start trading the following week, thanks to actions by Volatility Shares,” the analysts said. However, they also cautioned that not all proposed ETFs are likely to get the go-ahead.
Market Impact and Investor Demand
The anticipation surrounding Ether futures ETFs has already had a market impact. In August, a report suggested that these ETFs might be approved in October, leading to an 11% surge in ETH prices. Presently, ETH prices are up a modest 1%, hovering just above $1,600.
Historically, crypto futures products have not generated as much excitement as their spot-based counterparts. Bitcoin futures ETFs have been available in the US since 2021, setting a precedent for similar Ethereum products. However, many investors prefer direct exposure to the underlying assets rather than derivatives contracts. The SEC has yet to approve any spot Bitcoin or Ethereum ETFs, despite receiving dozens of applications from various issuers. The regulator has repeatedly delayed or rejected such proposals, citing concerns over market manipulation, volatility, and investor protection.
Nevertheless, some analysts believe that Ethereum futures ETFs could attract more demand than Bitcoin futures ETFs, given the growing popularity and innovation of the Ethereum network. Ethereum is the backbone of many decentralized applications, smart contracts, and non-fungible tokens (NFTs) that have taken the crypto space by storm. Moreover, Ethereum is undergoing a major upgrade that will transition it from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) one, which will make it more scalable, secure, and energy-efficient.
Ethereum futures ETFs could offer investors a convenient and regulated way to gain exposure to the potential growth of the Ethereum ecosystem, without having to deal with the technical and security challenges of buying and storing Ether directly.