The first U.S. exchange-traded funds (ETFs) tied to ether, the world’s second-largest cryptocurrency, began trading on Tuesday, marking a significant milestone in the crypto industry’s journey to mainstream acceptance. Ether ETFs from VanEck, Franklin Templeton, Fidelity, 21Shares, and Invesco started trading on Cboe, while BlackRock’s ETF launched on the Nasdaq, and products from Bitwise and Grayscale Investments debuted on the New York Stock Exchange.
This development follows the January launch of nine U.S. spot bitcoin ETFs. Analysts like Grzegorz Drozdz from Conotoxia Ltd. note that while ether ETFs may not attract as much inflow as bitcoin ETFs, they represent an essential step in the market’s development.
The launch also underscores the industry’s push to classify ether as a commodity. Although the SEC hasn’t explicitly declared Ether a commodity, the new products are defined as commodity-based trusts in their filing documents.
The introduction of ether ETFs arrives after a decade-long battle with the SEC, which had previously rejected similar products over market manipulation concerns. The SEC’s approval came after losing a court challenge to Grayscale Investments.
Despite a successful launch, ether prices fell, mirroring a similar decline in bitcoin. The ether ETFs’ fees range from 0.19% to 2.5%, with fewer waivers compared to bitcoin products. Galaxy Research projects that ether ETFs could attract $1 billion in monthly inflows, indicating strong interest and demand for digital assets beyond Bitcoin.
The SEC’s exclusion of the “staking” mechanism in these ETFs, which allows users to earn yield by locking up tokens, remains a notable issue for some investors. SEC Chair Gary Gensler acknowledged that the Grayscale ruling influenced the decision to approve the ether ETFs.
