Exchange-traded fund issuers are once again venturing into crypto territory that regulators had recently steered them away from.
VanEck, Roundhill and Volatility Shares are among a half dozen issuers that have submitted applications for Ether-futures ETFs since Friday, according to documents filed with the US Securities and Exchange Commission. Some of the latest attempts come from companies like Bitwise that pulled their applications for similar funds in mid-May.
The applicants may be emboldened by the recent approval of Volatility Shares’ 2X Bitcoin Futures ETF and the prospect of the first spot-Bitcoin product in the US. Given BlackRock’s strong track record, its June application for a Bitcoin ETF sparked immense excitement and hope that such a product might finally launch in the US, after years of attempts by issuers.
“Someone takes a stab at a filing and then the FOMO from other issuers occurs and multiple filings appear,” said Todd Sohn, ETF strategist at Strategas. “It’s mass hysteria — the potential market size is just too big for issuers to ignore.”
Crypto-centric funds are among the top-performing within the ETF universe this year, with the Valkyrie Bitcoin Miners ETF (ticker WGMI) and the VanEck Digital Transformation ETF (DAPP) each surging more than 200% since the end of December. The ProShares Bitcoin Strategy ETF (BITO), which was the first Bitcoin-futures fund to debut, has rallied 45% year to date.
“Recent history suggests the SEC will ask for these to be withdrawn. But Volatility Shares, the first to file here, managed to get a 2X Bitcoin Futures ETF through last month,” said Bloomberg Intelligence ETF analyst James Seyffart. “I doubt all these issuers would file at the same exact time if there weren’t at least a meaningful chance at approval.”
Regulators have for many years been hesitant to green-light attempts for crypto-centric exchange-traded funds, though Bitcoin-futures-based ETFs have traded in the US since 2021.
“While the SEC may be less likely to approve anything outside of the realm of Bitcoin, there is also less reason to reject a futures-Ether ETF given the existence of futures-Bitcoin ETFs,” said Roxanna Islam, associate director of research and head of sector and industry research at VettaFi. “Although the final outcome is difficult to predict, this does indicate that institutional interest in crypto is still strong and we could see firms continue to file applications over the next few days.”
Grayscale Investments also filed for an Ether-futures product, while ProShares is looking to launch a similar fund as well as one that would short Ether futures.
“Bitcoin futures have worked well with no major trading issues, so this seems like a natural progression of the category, plus the 2x Bitcoin launch a few weeks ago. So the comfort level seems to be growing,” said Sohn.