While anticipation over a potential Bitcoin (BTC) spot ETF has gripped investors, an Ethereum (ETH) ETF approval may also be waiting in the wings.
Bloomberg analysts are now assigning 75% odds of one such product being approved in the United States this year.
Ethereum ETF On The Horizon
As tweeted by Bloomberg ETF analyst James Seyffart on Friday, the organization’s approval odds are the same as those it assigned for a Bitcoin futures ETF in early September 2021.
The very first U.S.-based fund of the kind – the ProShares Bitcoin Strategy ETF (BITO) launched in late October of that year, pulling in $1 billion within two days of its launch.
At the time, many companies were vying to list the product after Gary Gensler – Chairman of the Securities and Exchange Commission (SEC) – stated that he was confident in the investor protections that a futures ETF framework could provide.
Today there are 13 Ethereum ETF applications knocking on the SEC’s door, from 8 different applicants including Bitwise, Proshares, and Grayscale. Based on the SEC’s deadlines, the first in line for approval or denial is Volatility Shares’ Ethereum Strategy ETF, by October 11.
“The SEC appears to be changing its posture towards crypto, based on reports of its back channel messaging to ETF issuers,” wrote the analysts. “We believe the SEC would have a hard time in court defending the denial of Ethereum futures ETFs after approving standard and leveraged Bitcoin futures ETFs. “
Bitcoin Spot ETF Approval Odds
As of August 4, there are 9 active Bitcoin spot ETF applications pending review by the SEC, with the latest applicant being from CBOE on behalf of the Global X Bitcoin Trust.
Like all other applications, CBOE’s latest filing selects Coinbase as a surveillance-sharing partner for detecting market manipulation – a crucial issue for the SEC for which its denied every major spot ETF application so far.
Shares for a Bitcoin spot ETF are backed by actual BTC held under custody by the trust and its partners. By contrast, futures ETFs are backed by Bitcoin futures contracts, which may not perfectly track the price of BTC at any particular time.
Unlike competitors, Grayscale is vying to convert its Bitcoin trust into a spot ETF by battling the SEC in court. The company argues that the regulator’s approval of futures ETFs, but not spot ETFs, demonstrates “arbitrary and capricious” treatment of the latter.
Recently, Bloomberg analysts raised their odds of a Bitcoin spot ETF approval this year to 65%, which they expect will come on the back of a Grayscale court victory.
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