18 Aug, 2023

Ether-Futures ETFs Could Debut on CME as Early as October

Suchet Dhindsa Salvesen
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Suchet Salvesen
Suchet Dhindsa Salvesen Suchet Salvesen Expert Author
Suchet is a Norwegian economist, entrepreneur, and investor, serving as the CFO and COO of Brainfund. With over a decade of experience in global expansion, venture capital, and emerging technologies, he earned his MBA from the NMBU School of Business & Economics. He held dual bachelor's degrees from the University of South-Eastern Norway. His career...
Nikita Sachdev
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Nikita Sachdev
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Nikita Sachdev, an Indian-American entrepreneur, and investor, holds degrees in Chemistry and Business from the University of Texas, Austin, and James Cook University. Post-graduation, she co-founded Singapore-based talent agency Luna Management in 2015, only to pivot into the crypto and blockchain sector in 2017 with the launch of Luna PR, a web3-oriented PR agency. During...
Ether-Futures ETF

TL;DR

  • ETFs based on Ether Futures could be launched in the US by early October this year on the Chicago Mercantile Exchange (CME).
  • Ether prices have risen over 10% during the overnight session as traders and investors front-run the decision.

The overnight session saw elevated volatility in the cryptocurrency market. Prices accelerated on the downside yesterday, driven by higher yields and rising US dollar. 

Traders received positive news from the US, where ETH-Futures ETFs are close to approval with the SEC.

Ether Futures ETFs are pending approval with the SEC.
Ether Futures ETFs are pending approval with the SEC. 

As Bloomberg reported a few hours ago, the agency will unlikely block the products. These might soon be available for trading on the Chicago Mercantile Exchange (CME).

US SEC close to approving Ether-Futures ETFs

Even though the information comes from sources, expectations point to imminent approval. The Securities and Exchange Commission (SEC) has been reluctant thus far to approve such products.

However, the regulator’s vision of various crypto products has evolved over time, moving in a favorable direction.

The latest news indicates that at least one Ether-Futures ETF could be approved by October.

The exact date and the precise approved applications are still unknown. If it turns out true, this will be the first crypto-related ETF trading in the United States.

Many institutional investors stayed on the sidelines, worried about the lack of transparency seen with traditional crypto exchange platforms. In case an ETF will debut on CME, that will mark a significant milestone for the industry.

Multiple asset managers have sent applications to the SEC

Close to 12 applications for ETH futures ETFs were sent for the SEC’s approval in July and August. 

Grayscale, VanEck, BitWise, Volatility Shares, and ProShares are major crypto brands interested in launching such products.

Ethereum is the second-largest crypto project in the world, judging by market capitalization. The token currently trades for $1,700, and the aggregate market cap exceeds $200 billion.

Given the high interest in ETH, it should be no surprise to see many investment firms eager to launch ETH-based derivatives contracts.

Apparently, the latest news suggests that the SEC is not expected to reject any of the proposals for ETH futures ETFs. That has to do with the design of these products.

gary gensler ETH etf
Gary Gensler | Photographer: Andrew Harrer

The regulator has long been worried about issues like custody. With futures ETFs, that problem is off the table.

A higher chance of approval?

Yesterday, we talked about the first European physically-backed Bitcoin ETF. The instrument started trading on the Amsterdam Euronext. With futures-based ETFs, however, investors gain exposure to a different instrument.

Instead of using physical coins to back the ETF, futures contracts are bought/sold, depending on trading activity. That’s why the latest ETH futures ETFs have a high chance of approval.

Ether futures contracts are already available for trading on the CME. Basically, the SEC will have to agree on a derivative based on a product it has approved in the past.

That said, is this the sign of confidence the market has been waiting for?