Ethereum ETFs are coming — here’s what you need to know.
After years of regulatory pushback and countless updated filings, Spot Ether (ETH) exchange-traded funds (ETFs) are finally hitting the market.
For the first time publicly traded Ethereum (ETH) ETFs, shares will be listed on the most popular brokerage platforms in the United States, such as Apple Inc (AAPL) and the SPDR S&P 500 ETF Trust (SPY).
The expected details are a critical moment for the cryptocurrency markets and an opportunity for millions of US institutional and retail investors. Here's what you need to know to make the most of it.
When will Ether ETFs be available?
The Chicago Board Options Exchange (CBOE) has confirmed July 23 as the opening date for the five ETFs designated for trading on the platform: 21Shares Core Ethereum ETF, Fidelity Ethereum Fund, Invesco Galaxy Ethereum ETF, VanEck Ethereum ETF and Franklin Ethereum ETF.
Related: Stop piling into leveraged Bitcoin ETFs and consider this one instead
The four other venues trade ETH ETFs on the Nasdaq or New York Stock Exchange (NYSE) Arca. While there have been no official announcements from those exchanges yet, they are widely expected to list on July 23.
Where can I buy Ethereum ETF shares?
The short answer is: almost any major brokerage platform. Every spot ETH ETF set to list in the last week of July has already received regulatory approval to trade on at least one major US exchange – typically Nasdaq, New York Stock Exchange (NYSE) Arca or Cboe BZX.
Everyday investors do not trade directly on those exchanges. Instead, they rely on brokerage platforms — household names like Fidelity, E*TRADE, Robinhood, Charles Schwab and TD Ameritrade — as intermediaries.
Once ETH ETF shares are listed on public exchanges, expect to be able to facilitate all the big name brokers and other trades.
What are my options and how do I know which one is best?
Nine Point Ether ETFs are ready to start trading. In terms of basic mechanics, the funds are the same. Each ETF is backed by a reputable fund manager, places ETH with a qualified custodian, and relies on a leading team of professional market makers to create and redeem shares. They also all benefit from the same investor protections, including insurance against brokerage failures and cyber security risks.
For most investors, the deciding factor comes down to fees. Management fees for eight of the nine ETFs range from 0.15% to 0.25%. One big exception is Grayscale Ethereum Trust (ETHE), which began trading in 2017 under a different fund structure and still charges 2.5 percent management fees.
Most – but not all – Ethereum ETFs are temporarily waiving or reducing fees to lure investors. Grayscale Ethereum Trust is one of the biggest players here, along with the Invesco Galaxy Ethereum ETF (QETH).
Related: Bitcoin selloff could put ETF stocks on the discount shelf
Interestingly, the clear front-runner in the payments race is also grayscale. The Grayscale Ethereum Mini Trust (ETH) – a new fund created to be listed as an ETF – has management fees of only 0.15%. Those fees are completely waived in the first six months after listing, or until the fund reaches $2 billion in assets under management (AUM).
Another compelling choice is Franklin Templeton's Franklin Ethereum ETF (EZET). At 0.19%, management fees are the second-lowest, and will be fully phased out until January 2025, or until the fund clears $10 billion in AUM.
Do SpotEther ETFs offer stocks?
The short answer here is “no”. Longer answer: “Maybe, but not anytime soon.”
As a refresher, staking involves depositing ETH into validating nodes on Ethereum's Beacon Chain. Staked ETH will reduce network fees and other rewards, but if the validator goes wrong or fails, it can “snap” – or lose the stake.
Staking is attractive because it increases returns significantly. According to StakingRewards.com, annual rewards will stand at 3.7% as of July 19.
Earlier this year, several issuers — including Fidelity, BlackRock and Franklin Templeton — sought a regulatory symbol to identify ETH ETFs. The SEC denied those requests.
According to several people involved in the talks who spoke to Cointelegraph on condition of anonymity, the issue will come down to liquidation. Staked ETH usually takes days to leave the beacon chain. That's a problem for issuers, who are required to redeem ETF shares for underlying fund assets on demand.
Issuers are still looking for ways to increase stakes in existing spot ETH ETFs—perhaps by maintaining a liquid spot Ether “hold”—but a workable plan is months away at best, the people told Cointelegraph. For now, stacking is off the table for Ether ETFs.
Alex O'Donnell is a senior writer for Cointelegraph. He previously founded DeFi developer Umimi Labs and worked as a financial journalist at Reuters for seven years, where he covered M&A and IPOs. He is the crypto development leader at Startup Accelerator Expert Dojo.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
