Cryptocurrency has now entered mainstream investing since the acceptance of the Bitcoin Spot ETFs back in January 10 2024. Ethereum is also primed to follow by having its own spot ETFs by large institutions such as Blackrock and Fidelity, further exposing the cryptocurrency market to the masses. There’s a lot to unpack about Ethereum Spot ETF and speculations about what will happen if it were to be accepted which will be covered in this article.

What Is An Ethereum ETF

Just like the Bitcoin Spot ETFs, an Ethereum Exchange Traded Fund (ETF) is an investment product that allows investors to gain exposure to Ethereum through traditional stock exchanges. Providing investors to invest in Ethereum without needing to hold the cryptocurrency itself, it relies on large institutional asset managers to safekeep these assets for them. Large institutional asset managers like Grayscale offer these financial products that are tied to the price performance of Ethereum with an additional management fee for holding the actual cryptocurrency.

SEC’s Final Deadlines

The U.S. Securities and Exchange Commission has been the subject of anticipation for those who are looking to have an ETH ETF approved. Deadlines have been repeatedly postponed by the SEC but VanEck’s Ethereum ETF seeks to have a final deadline on May 23, followed by Ark Invest and 21Shares on the following day, May 24.

However, it is unclear whether the SEC will be approving or rejecting all Ethereum ETFs at the same time. Similar to the recently approved Bitcoin ETFs, asset managers had different final deadlines imposed by the SEC but had 11 of the ETFs approved on the same day. If the SEC decides to approve all Ethereum ETFs on the same day by May 23, volatility in the price of Ethereum is to be expected.

Ethereum ETF Applications

The Ethereum Spot ETFs are held by 8 large institutional asset managers who are responsible for providing these financial products to retail investors while safekeeping the actual cryptocurrency with themselves. Here are the 8 asset managers and what we know about them and their involvement with Ethereum:

Ark Invest/21Shares: Ark Invest is one of the first Ethereum Spot ETF issuers with a total assets under management of $6.71 billion. Their CEO, Cathy Woods, is a known enthusiast of Bitcoin and the rest of Cryptocurrency. They have a final deadline of May 24, 2024 as issued by the SEC.

VanEck: VanEck, the first asset manager to apply for an Ethereum Spot ETF, has a total assets under management of $76.4 billion. Although they deal with mutual funds, they are primarily focused on exchange traded funds. They have a final deadline of May 23, 2024 which is the first deadline among the other Ethereum Spot ETFs.

Grayscale: Grayscale is an asset manager that primarily focuses on digital assets such as cryptocurrency. They have a total assets under management of $50 billion, most of which are in cryptocurrency like Bitcoin. They have a final deadline of June 18, 2024.

BlackRock: BlackRock is the largest investment company that has a total assets under management of up a staggering to $9 trillion. As of February 21 from BlackRock data, they have been aggressively buying Bitcoin and have accumulated up to 124,534 BTC in a short amount of time. They have a final deadline of August 7, 2024.

Hashdex: Hashdex has been a pioneer of asset management for cryptocurrencies with a total assets under management of $709 million. They have a final deadline of May 30, 2024.

Invesco: Invesco is an American independent investment management company that deals with a variety of asset classes from real estate, stocks, gold, and digital assets. As of the latest release of their AUM on January 31, 2024, they have a total assets under management of $1.58 trillion. They have a final deadline of July 5, 2024.

Fidelity: Fidelity is one of the largest investment management companies in the U.S with a total assets under management of $4.5 trillion. They first looked into investing in digital assets such as cryptocurrency when they launched Fidelity Digital Assets in mid-October of 2018. They have a final deadline of August 3, 2024.

Franklin Templeton: One of the latest applicants for an Ethereum spot ETF, they have a total assets under management of $1.5 trillion. They currently have not been given a final deadline by the SEC for an approval. Franklin Templeton has recently disclosed on February 12, 2024 that they have applied for an Ethereum spot ETF.

Ethereum ETF & Bitcoin ETF

Will the Ethereum Spot ETF mirror the same success as the Bitcoin ETF? Let’s analyze how the Ethereum ETF can affect $ETH and the rest of the cryptocurrency market. After the Bitcoin Spot ETF approval, Bitcoin proceeded to experience a 20% correction due to Grayscale investors moving to different Bitcoin Spot ETFs. 

In a latest release by Grayscale on January 18, 2024, Grayscale currently has a total of $7.2 billion worth of Ethereum under their Ethereum trust. However, it is uncertain whether we will experience a similar selloff by Grayscale until asset managers disclose their Ethereum Spot ETF management fees.Despite fears of a similar selloff, an approved Ethereum Spot ETF will expose Ethereum to retail investors in traditional stock exchanges which should have some positive implications.

The Ethereum spot ETF shows significant potential for the adoption and further exposure of cryptocurrencies. An approved Ethereum spot ETF may signify the start of cryptocurrency’s legitimization and removal of stigmas. Whether a spur of different ETFs may emerge such as a potential XRP spot ETF or a Chainlink Spot ETF, only large institutional investment and asset managers can tell and only speculations by retail cryptocurrency investors can be made.