Ethereum Futures ETF Set for SEC Approval

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  • The SEC is set to approve Ethereum futures ETFs two years after allowing permission for Bitcoin futures ETFs
  • The commission’s cautious approach towards cryptocurrency ETFs shifted in 2021 when it permitted the first Bitcoin futures-based ETF
  • Grayscale expects to hear about its lawsuit against the SEC today

Institutional Ethereum futures are a step closer, according to Bloomberg, with the Securities and Exchange Commission (SEC) set to approve an ETF tied to it. Insiders familiar with the matter told the outlet that the SEC will allow the launch of Ethereum futures ETFs almost two years after the first Bitcoin futures ETF launched, with almost a dozen companies, including prominent names like Volatility Shares, Bitwise, Roundhill, and ProShares, submitting applications to introduce these Ether futures-based ETFs.

SEC Much More Open to Futures ETFs

The SEC has been historically cautious about endorsing ETFs directly tied to cryptocurrencies, resisting every spot Bitcoin ETF application that has come its way so far. However, a pivotal shift occurred in 2021 when the commission began permitting the trading of an ETF linked to Bitcoin futures contracts, tradable on the Chicago Mercantile Exchange (CME). With the success of Bitcoin futures-based ETFs, anticipation has mounted regarding the potential introduction of ETFs based on Ethereum futures, which are also traded on the CME.

While the specific ETFs that will receive regulatory approval remain undisclosed, Bloomberg’s sources suggest that several could be given the green light by October. An anonymous insider commented that regulatory officials have hinted at such a timeline, although this information is not yet public.

SEC chair Gary Gensler noted when discussing the potential for a Bitcoin futures ETF in September 2021 that the 1940 law governing such filings provides “significant investor protection” for mutual funds and ETFs compared to the spot-based Bitcoin ETFs which are more open to volatility. Three weeks later, the first Bitcoin futures ETF was approved.

Grayscale Expects Lawsuit Decision Today

The SEC is currently locked in a complex standoff with the cryptocurrency industry over its reluctance to embrace ETFs directly tied to Bitcoin. One pivotal legal dispute involves Grayscale Investments, which expects to hear today whether its lawsuit against the SEC for blocking the conversion of its Grayscale Bitcoin Trust to a spot ETF has been successful. 

The commission’s reservations stem from concerns about the inherent risks in the crypto market, including potential price manipulation, liquidity challenges, and the extreme price volatility frequently associated with cryptocurrencies.