) continues its rapid development: on the market appeared news about the possible launch of exchange-traded funds based on it. Previously, such an experiment was carried out only with Bitcoin (), but these ideas have not yet been implemented. Now, Invesco and Galaxy Digital filed an application to the U.S. Securities and Exchange Commission () in order to launch spot ETFs based on Ethereum.
The SEC has put the application on hold for now. It’s worth mentioning that similar requests were previously submitted from such companies as . The Commission has not yet made a decision; according to an official statement, it needs more time to study the issue.
If you want to buy, sell or exchange Ethereum (ETH), then the easiest way is to use SimpleSwap services. You can create an exchange there without registration!
For a crypto project, launching its own ETFs would mean an increase in the flow of investors by simplifying access to crypto investments. Approval of the application to launch Ethereum-ETF would significantly strengthen the position of the already confident cryptocurrency.
Exchange-traded fund (ETF) is an exchange-traded investment fund that invests in assets, issues securities against them and trades them on the exchange. The fund usually includes:
- securities;
- valuable goods;
- stock indices;
- currency, etc.
ETFs give the investor the opportunity to follow the price movement of a coin (an index). However, it is not necessary to own the coin itself in order to do that.
ETF securities are considered to be a good choice for novice investors – they might significantly simplify their life and save time. Instead of having to figure out crypto exchanges and diversifying investment portfolios on their own, investors can just buy ETF shares and start making profits from them.
Who manages the ETF?
Specialized companies organize the work and manage exchange-traded funds. Some of the most well-known companies of this type include BlackRockCharles SchwabVanguardState Street. The popularity of ETFs has increased in 2021. At that time, the total volume of funds in the funds was about $10 trillion. So more and more companies started to appear in this sector.
ETF connection with cryptocurrency
The position of cryptocurrency is strengthening every year: more people are getting acquainted with the crypto business. It seems like almost everyone had heard something about cryptocurrency. However, confidence in digital gold has not yet reached a high level. There are still problems with the regulation of cryptocurrenciescountries do not understand how to handle crypto “legally,” how to determine their legal status, what to do with taxation, and what rules to use to protect owners in the event of fraudulent attacks.
In the traditional financial landscape, ETFs have been around for a long time and have a long history of success. This tool is also suitable for the field of decentralized finance () – it is highly liquid, accessible, transparent, diversified, and has relatively low commissions.
When it comes to the Crypto World, the ETF would become an indispensable investment tool. Any change in the price of a crypto asset in a positive direction could bring profit to holders of crypto ETFs. But due to problems with the legality of cryptocurrency, such prospects are still vague.
Launch of futures ETFs on Ethereum
Despite the lengthy review of applications for the launch of spot ETFs, futures ETFs for Ethereum were to the world in early October. On October 2, 2023, it became possible to trade Ethereum-based futures. The following companies are engaged in issuing futures ETFs for Ethereum: ProSharesValkyrieVolshares
When talking about ETFs, it's important to remember that there are differences between the spot and futures markets. In the spot market, the purchase of a financial instrument or asset occurs at the same moment. In the futures market, delivery of a commodity occurs later than the closing of the transaction to purchase it.
Unlike spot ETFs, futures ETFs do not give their owner the right to directly use crypto assets and do not imply their purchase on the market. They track futures contracts, which create price forecasts for the future.
Is it possible to launch spot ETFs in the future?
In June 2023, a wave of discussions arose in the crypto community about the possible release of spot Bitcoin ETFs. Applications, like this one, have been actively filed to the SEC, but have so far remained unanswered.
It seems like the introduction of spot crypto-ETFs into circulation will be possible only when crypto-assets receive government recognition and regulatory authorities can legally monitor their activities. In general, according to analyst forecasts, a similar development scenario in the future is possible, since the global spread of cryptocurrencies is now on the rise.
If you want to learn more interesting facts about crypto then check out our blog! You might like our articles “Why People Love CryptocurrencyEthereum Futures ETFs Explained
