The investment firms sent letters to the SEC on Friday, dampening hopes that a crypto ETF could be approved this year.
An ETF, or exchange-traded fund, is a monetary product that tracks the worth of an asset or group of assets. Instead of shopping for the asset(s), however, you can buy and trade shares in them on an exchange. Since ETFs are much easier to trade than closed trusts like Grayscale’s, investment firms have been clamoring to get crypto-based ETFs to market.
The VanEck and ProShares ETFs would have invested in ETH futures contracts, but not Ethereum itself. A futures contract is a type of derivative that sets the price of an asset ahead of time. In case you think the price of Ether will go as much as $3,000, for example, you might be happy purchasing futures contracts at $2,500.
But the SEC has but to grant approval to any crypto ETF. A rising pile of Bitcoin ETFs sits on the company’s desk. And VanEck, WisdomTree and Kryptoin all have Ethereum ETFs—separate from the Ethereum futures ETFs—pending earlier than the company
Earlier this month, SEC Chairman Gary Gensler indicated that he would be more open to ETFs linked to Bitcoin futures, such as those on the Chicago Mercantile Exchange, not Bitcoin itself. Futures trading is regulated by the Commodity Futures Trading Fee, the SEC’s sister company.
That prompted VanEck to send a Bitcoin futures ETF proposal to the SEC the next week. It followed it up with the Ethereum futures ETF proposal, which it has now taken back.