ProShares, a well-known issuer of exchange-traded funds (ETFs), has filed a proposal to list and trade spot Ethereum (ETH) ETF shares on the New York Stock Exchange (NYSE). According to the filing with the United States Securities Exchange Commission (SEC), the ProShares Ethereum ETF will utilize Coinbase Custody Trust Company for ETH custody. However, the asset manager clarified that the firm and its associated parties will not partake in activities related to Ethereum staking.
Potential spot Ethereum ETF issuers have made adjustments to their 19b-4 and S-1 filings to exclude staking components, aligning with the SEC’s position on staking for spot Ethereum ETFs. Although these revisions aim to comply with regulatory standards, the exclusion of staking capabilities may deter investors who seek additional yield from staking rewards. This means that investors who buy, hold, and stake ETH on their own can earn staking rewards, but spot Ethereum ETFs will not offer these additional benefits.
The SEC has a specific timeline of 45 days, extendable to 90 days, from the notice publication date to respond to the filing. Given that ProShares submitted its spot ETH ETF proposal on June 6, 2024, approval could potentially be granted by late July 2024. This proposal comes after ProShares recently launched two Ethereum-linked ETFs: ProShares Ultra Ether ETF (ETHT) and ProShares UltraShort Ether ETF (ETHD), targeting 2x and -2x daily ETH returns, respectively. Both ETFs are scheduled to be listed on the NYSE on Friday, June 7.
ProShares has been a trailblazer in the ETF space, as evidenced by its launch of the first Bitcoin-linked ETF, the Bitcoin Strategy ETF (BITO), in 2021, which invests in futures contracts. However, ProShares has not pursued a spot Bitcoin (BTC) ETF, in contrast to other major asset management firms like Blackrock, Grayscale, and Fidelity. It is important to note that the spot Ethereum ETFs require approval for both filings to officially begin trading in the market. The approval granted in May was solely for the 19b-4.
Market analysts are optimistic that the final approval for these ETFs may be granted in July 2024. These new products are expected to offer investors increased flexibility and strategy, allowing for more nuanced navigation of the volatile cryptocurrency market. In the meantime, the Bitcoin ETF has garnered significant attention, attracting $2.4 billion in investments after experiencing consistent inflows for the past 15 days, according to Senior Bloomberg ETF analyst Eric Balchunas.
In conclusion, ProShares’ proposal to introduce spot Ethereum ETF shares on the NYSE highlights the increasing interest in cryptocurrency investment opportunities. While the exclusion of staking capabilities in these ETFs may deter some investors, the potential approval of these products could mark a significant milestone in the mainstream adoption of cryptocurrencies. With regulatory scrutiny and market demand playing crucial roles in the approval process, investors and industry experts are eagerly awaiting the SEC’s decision on ProShares’ spot ETH ETF proposal in the coming months.
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