NEW YORK – The United States Securities and Exchange Commission (SEC) is poised to allow the first exchange-traded funds (ETFs) based on Ether futures, a major win for several firms that have long sought to offer the products.
The regulator is not likely to block the products, according to people familiar with the matter. Nearly a dozen companies, including Volatility Shares, Bitwise, Roundhill and ProShares, have filed to launch the ETFs.
It could not immediately be determined which funds would get the green light. Officials have indicated that several might get the nod by October, said one of the people. The SEC declined to comment.
Ether is the main token of the Ethereum blockchain and the world’s second-largest cryptocurrency by market capitalisation.
The regulator has refused to allow an ETF based directly on a cryptocurrency, but in late 2021, it started allowing trading in a fund that involves Bitcoin futures contracts that trade on the Chicago Mercantile Exchange. Speculation has been mounting that a product with Ether futures, which also trade on the exchange, would be next.
Despite that buzz, SEC approval for a product involving derivatives in Ether has been slow. Bitcoin, the world’s biggest cryptocurrency, commands a market value of roughly US$512 billion (S$694.5 billion), while Ether’s is US$195 billion, according to CoinGecko.
Meanwhile, the SEC remains locked in a battle with the industry over its pushback against ETFs based on Bitcoin itself. In one high-stakes case, a panel of US federal appellate court judges is set to make a decision on a lawsuit by Grayscale Investments challenging the SEC’s rejection of an application to convert its Bitcoin trust into an ETF.
The SEC has argued that the crypto space is plagued with investor hazards. The agency has expressed concern that prices could be manipulated and liquidity might be insufficient, and that Bitcoin’s drastic price swings may be too much for individual investors.
Still, several firms, including BlackRock, recently filed applications to list ETFs based directly on Bitcoin. The BlackRock filing in June helped push the token’s price above US$31,000. It has since spent the majority of July and August hovering at around US$29,000.
On Thursday, Bitcoin traded near US$26,000. Ether, at US$1,600, has dropped about 11 per cent so far in August. BLOOMBERG
