Asset management firm Valkyrie has submitted an application to the US Securities and Exchange Commission (SEC) for the approval of Ethereum futures exchange-traded funds (ETFs). This move follows the company's previous effort to alter its bitcoin investment strategy to comply with regulatory standards for futures ETFs.
The proposed fund, as outlined in the August 16 filing, will not directly invest in Ethereum itself. Instead, it aims to acquire Ethereum futures contracts. Ethereum's native cryptocurrency, ether, is used within the Ethereum blockchain network for decentralized peer- to-peer transactions.
The filing highlights that Ethereum's classification can vary based on its specific usage in transactions, ranging from being seen as a currency to a digital commodity. While Ethereum is increasingly accepted by various retailers for payments, its widespread use for commercial and ret ail transactions remain somewhat limited , possibly due to its price volatility.
Apart from investing in Ethereum futures, the ETF will allocate its remaining assets to cash, cash-equivalents, and high-quality securities. These securities include government-issued bonds, notes, as well as corporate bonds and money market funds.
Valkyrie's application notes that the ETF's investment in Ethereum futures contracts will be subject to the position limits imposed by CME, with a monthly cap of 8,000 contracts. If approved, the ETF would allow investors to speculate on the future price of Ethereum.
Several other major asset managers, such as Grayscale, VanEck, Bitwise, Volatility Shares, ProShares, and Round Hill Capital, have also applied to offer Ethereum futures ETFs in the US market. These applications follow a growing anticipation that US regulators will eventually approve the launch of a spot bitcoin ETF in the country. Numerous investment firms, including industry giants like BlackRock and Fidelity, are seeking regulatory clearance to introduce such ETFs.
