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Spot ether ETF tools
Grayscale Ethereum Mini Trust (ETH)
Grayscale Ethereum Trust (ETHE)
Bitwise Ethereum (ETHW)
VanEck Ethereum (ETHV)
21Shares Core Ethereum (CETH)
Invesco Galaxy Ethereum (QETH)
Fidelity Ethereum (FETH)
Franklin Ethereum (EZET)
iShares Ethereum Trust (ETHA)
Like the local bitcoin ETFs that launched in January, most waive fees initially — in most cases for up to a year.
By the standards of ETF startups, spot bitcoin ETFs have been successful: They recently exceeded $17 billion in net annual flows since their inception.
For a new asset class, that’s a huge achievement.
However, with $1.3 trillion in total assets, bitcoin has nearly three times the value of ether, which has a capitalization of $414 billion. That could reduce the initial appeal of ether ETFs.
Bitcoin prices soared after the launch of bitcoin ETFs. Ether has been more spotty: It’s up 50% in 2024, but most of the gains came in the first three months of the year.
However, for Ethereum enthusiasts, the main value of the ETF space is that it is the perfect vehicle to educate the public about Ethereum’s use cases, which are far greater than anything bitcoin has to offer. .
Ben Johnson, Morningstar’s head of client solutions and ETF research expert, noted that while bitcoin is often heralded as digital gold, “Ethereum is like picks and shovels.”
“The first case is that it is limited and can be a store of value, the latter is not limited and is used to build real world applications,” he said.
Many investors have never been attracted to bitcoin, mainly because the use case seems weak: It’s just a digital currency. But the Ethereum platform is different.
Bitcoin and Ethereum both use blockchain, an embedded, immutable ledger to record transaction history, but they have very different purposes.
Bitcoin uses the blockchain as a digital currency. Ethereum uses a digital currency like bitcoin, but its blockchain has broader purposes. (Ether is the cryptocurrency used on the Ethereum network, but in fact the terms Ethereum and ether are often used interchangeably.)
Ethereum is a platform for building smart contracts, which are autonomous programs that validate a pre-existing contract or agreement. It can be as simple as “If I do this, you do that.” The important thing is that they execute on purpose, they are made to block (the Ethereum network) and they produce the same result every time they are executed. They also have a wide range of accessories.
The most common application is decentralized finance, or “DeFi.” This is a fancy term for using financial services on the blockchain. In theory, you can perform any banking service: Users can send, borrow or borrow money, open a savings account, stocks or derivatives or other cryptocurrencies, get insurance . In theory, you can also do real estate business. Users can perform these tasks using software called “decentralized apps.”
The issue of consumption goes beyond financial services. Users can play games. Organizations can use it to track supply chains. It can even be used as a clearing platform to settle stock trades.
Another application for Ethereum: stablecoins. These are cryptocurrencies whose value is pegged to another asset, usually the dollar. Because cryptocurrencies such as bitcoin and ether are immutable, many DeFi applications rely on stablecoins for borrowing, lending and trading.
The promise is a transaction network that – in theory – can be a cheap and fast way to do business.
It’s unclear whether this latest development will open the floodgates for more crypto ETFs — or whether the US Securities and Exchange Commission will find a way to stem the potential tide.
Any applicant for other crypto ETFs will still need to demonstrate that the underlying market was not captured, which is a key requirement for approval of these funds.
But much may depend on the political situation.
In the past, for stocks, the SEC typically required that a regulated futures market be traded along with the stock. Currently, it only exists for bitcoin and ether, so it would take time to develop futures markets for other crypto products.
“Under the current administration in Washington, that would not change,” Matt Hougan, Bitwise’s chief financial officer told me. “But if you get a change of administration in Washington, that could change.”
Regardless, expect a lot of business. “These new ETHs are probably going to sell a lot,” Johnson at Morningstar told me. “I think if the options on these ETFs become available, this will all go into overdrive…. These ETFs effectively add a new wing to the crypto casino.”
At the moment, selling Ethereum as a new transaction platform is the main game, and Ethereum enthusiasts have a strong argument: that the platform is a technology investment at heart.
“Many investors view bitcoin as digital gold, a store of value, while investors see Ethereum as a technology play,” Hunter Horsley, CEO of Bitwise, said on CNBC TV last night.
Note: Jan van Eck, CEO of VanEck; Ben Johnson of Morningstar; and David Mann, ETF products and capital markets at Franklin Templeton, will be on ETF Edge Tuesday, July 23 at 1:10 pm, Eastern. ETFEdge.cnbc.com.
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