Valkyrie, a notable asset management firm, is making waves in the Ethereum ecosystem by submitting an application to the SEC for an Ether futures ETF, per an August 16 document. This move comes on the heels of Valkyrie’s prior application for a Bitcoin spot ETF.
Ether, Ethereum’s native digital token, has been steadily gaining momentum not just as an investment vehicle but also as a transactional currency and a cornerstone in the decentralized finance (DeFi) realm.
Valkyrie’s proposal offers a unique approach. Instead of facilitating direct Ether investments, the intended ETF will focus on Ether futures contracts. This method is designed to give investors a taste of Ether’s price movements without the complexities of owning the digital asset directly:
“The ETF’s strategy will be to invest indirectly through a subsidiary based in the Cayman Islands. This subsidiary will engage in standardized, cash-settled futures contracts on Ether, traded on CFTC-registered commodity exchanges.”
The filing underscores Ether’s multifaceted role in the financial world, emphasizing its potential as both a currency and a digital commodity. While the document acknowledges Ether’s acceptance by a myriad of global retailers, it also notes that its widespread adoption for routine commercial transactions is still in its infancy.
If sanctioned, Valkyrie’s Ether futures ETF could act as a conduit for traditional investors intrigued by digital currencies but wary of direct involvement.
The SEC has historically been circumspect about cryptocurrency ETFs, particularly those centered on Bitcoin. Numerous Bitcoin spot ETF applications have faced the commission’s skepticism or outright rejection.
The SEC’s reservations revolve around issues like market manipulation, liquidity, and safeguarding investors. However, as highlighted by GrayScale’s lawsuit against the SEC in June 2022, there’s a perceived inconsistency in the commission’s approach. GrayScale argued that the SEC’s approval of certain high-risk Bitcoin products, like leveraged bitcoin futures ETPs, indicates a lack of intention to apply uniform standards across similar investment products.
