Historic Debut of Spot Ethereum ETFs in US Financial Markets

Today, the US financial markets witness a pivotal moment as the first spot Ethereum exchange-traded funds (ETFs) begin trading. This marks a significant milestone, allowing investors to engage directly with Ethereum, the world’s second-largest cryptocurrency.

SEC Approval

The US Securities and Exchange Commission (SEC) approved the S1 registration statements on Monday afternoon, enabling the funds to commence trading. This approval comes shortly after the launch of spot Bitcoin ETFs in January.

Fee Structures and Issuers

Eight issuers are launching spot Ethereum ETFs with diverse fee structures:

• Grayscale Ethereum Mini Trust (NYSE: ETH): 0.15% post-waiver fee

• Franklin Ethereum ETF (CBOE: EZET): 0.19%

• VanEck Ethereum ETF (CBOE: ETHV): 0.20%

• Bitwise Ethereum ETF (NYSE: ETHW): 0.20%

• 21Shares Core Ethereum ETF (CBOE: CETH): 0.21%

• Fidelity Ethereum Fund (CBOE: FETH): 0.25%

• iShare Ethereum Trust (NASDAQ: ETHA): 0.25%

• Invesco Galaxy Ethereum ETF (CBOE: QETH): 0.25%

Grayscale’s existing Ethereum Trust (NYSE: ETHE) will continue trading with a higher fee of 2.5%.

Custodial Choices

Most of these funds will use Coinbase as their custodian, while VanEck has selected Gemini and Fidelity will self-custody its ether.

Analyst Projections

Analysts predict that Ethereum ETFs will attract more modest inflows compared to Bitcoin ETFs. Citigroup estimates inflows between $4.7 billion and $5.4 billion over the first six months. Nate Geraci, president of The ETF Store, suggests Ethereum ETF demand may reach about one-third of the demand seen with Bitcoin ETFs.

Market Impact

The introduction of Ethereum ETFs offers a new investment avenue for both institutional investors and retail traders. While Ethereum ETFs are expected to see lower initial inflows than Bitcoin ETFs, projections indicate up to $1 billion in net inflows monthly for the first half-year.

Jay Jacobs' Insight

Jay Jacobs, BlackRock’s US head of thematic and active ETFs, underscores Ethereum’s utility, likening it to a global platform for applications that operate without decentralised intermediaries.

Despite the positive outlook, the long-term impact of Ethereum ETFs on market dynamics remains uncertain. The cryptocurrency market's inherent volatility and the evolving regulatory landscape pose significant challenges.