Kelly Strategic Management Submits ETF Application for Ethereum Futures

Denver-based investment firm Kelly Strategic Management has filed for an exchange-traded fund (ETF) offering exposure to ethereum futures contracts.

Three months ago, VanEck and ProShares abruptly withdrew their ETH futures ETF applications on the same day in August.

According to a Nov. 29 filing with the U.S. Securities and Exchange Commission (SEC), the Kelly Ethereum Ether Strategy ETF will invest in cash-settled ethereum futures contracts traded on the Chicago Mercantile Exchange (CME).

Eric Balchunas, senior ETF analyst at Bloomberg, pointed out on Twitter today that Kelly's Ethereum ETF may only have a 20% chance of being approved, and he is skeptical that "the US SEC is ready to take this new move."

In Balchunas’ view, he believes that US SEC Chairman Gary Gensler is “not yet mentally prepared” to approve any product other than a Bitcoin futures ETF at this stage:

“In the Bitcoin futures application in August, VanEck and ProShares also applied for the Ethereum ETF. The US SEC asked them to withdraw their applications. It has now been 3 months (3 Bitcoin futures ETFs were successfully launched).”

Balchunas added that if the rumor that the US SEC asked VanEck and ProShares to withdraw their respective Ethereum ETF applications because they provided exposure to crypto assets other than Bitcoin is true, then the chances of Kelly’s ETF being approved will be 1%.

I just had a quick chat with James Seyffart, and our early rough estimate was that the odds of this ETF getting approved were about 20%, unless the rumors are correct, we'd estimate something lower, like 1% (although we're still seeing Multiple ETFs hold ETHE)

— EricBalchunas (@EricBalchunas) November 29, 2021

Researcher Jason Lowery commented: “I would be surprised if the US SEC approves an Ethereum ETF, as it would be tantamount to tacitly acknowledging that ETH is not an unregistered security.”

The U.S. SEC has already approved several Bitcoin futures ETFs in the second half of 2021, but at present, it seems that the regulator is unwilling to approve any funds that provide exposure to cryptocurrencies other than BTC futures contracts.

This was highlighted earlier this month by Anna Paglia, Invesco’s global head of ETF and index strategy, who explained that her firm’s decision to drop a bitcoin futures ETF was due to the US SEC’s approval for only 100% bitcoin holdings. Futures Bitcoin ETF.

Invesco's ETF is designed to provide a mix of futures swaps for the bitcoin industry, physical bitcoin and private equity.

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