- An ethereum-based ETF may come as soon as this year, according to Trey Griggs, US CEO of crypto trading firm GSR.
- “The heavy lifting has been done with the launch of the bitcoin-futures ETF,” he told Insider.
- Griggs said the crucial milestone was the listing of ethereum futures on CME in February 2021.
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If the blockbuster success of the first-ever bitcoin-futures exchange-traded fund is any indication, the debut of an ethereum-based one may just be as victorious. And according to Trey Griggs, US CEO of crypto trading firm GSR, ethereum bulls may not have to wait much longer.
“The heavy lifting has been done with the launch of the bitcoin-futures ETF,” he told Insider. “It could be done this year.”
Griggs said the crucial milestone was the listing of ethereum futures on the Chicago Mercantile Exchange in February 2021, significantly strengthening ethereum’s credibility as an asset class just like it did for bitcoin when the coin listed in December 2017.
A listing at the derivatives exchange, which is cash-settled and is priced on a CME reference rate that gathers data from various crypto exchanges, allows investors to gain exposure via futures contracts rather than owning the coins outright. Futures are contracts to buy and sell an asset at a predetermined price and time.
“It is an incrementally minuscule lift to say ‘yes’ to the numerous ethereum-based ETF applications,” Griggs told Insider. “I don’t believe the SEC will require the same long time in order to approve an ETF for what is effectively an identical product with a slightly different underlier.”
Thus far, there are around five known applications for ethereum-based ETFs in the US.
Meanwhile, bitcoin futures ETFs are moving quickly after nearly a decade of attempts by the $6.7 trillion ETF industry to get a crypto-based fund approved.
The ProShares Bitcoin Strategy ETF debuted on Tuesday, becoming the first-ever bitcoin-futures ETF to be listed in the US and the second-most-traded fund launch of all time. The Valkyrie Bitcoin Strategy ETF launches Friday, and another from Van Eck is due next week.
Prospects for other altcoin ETFs
As for potential altcoin-futures ETFs, Griggs said these may be feasible, but not in the near-term. The question, he said, is whether these coins will be listed at the CME to begin with.
But in theory, some cryptocurrencies such as solana, cardano, and polkadot have the same blockchain technology as ethereum, which is why Griggs said the idea is not far-fetched.
“If the CME can get comfortable, under the CFTC guidance, that ethereum is a commodity, and therefore as a commodity, it can have traded futures contracts, then similarly, I would try to think it would get comfortable with some of those other layer-1 protocols to be listed as futures contracts,” he said.
Still, the futures market has its own quirks. For one, it is less liquid and less deep. And options traders can quickly find themselves in a squeeze if massive demand breaches the limit on the number of futures contracts it is permitted to hold by the CME. The ProShares bitcoin ETF is nearly there already, according to Bloomberg.
But once an altcoin ETF gets a green light, expect the underlying cryptocurrency to move too. Bitcoin’s price surged to a new all-time high following the launch of ProShares, an indication of how ether’s price will behave as well. The second largest digital asset in the world has already gained 460% year-to-date and 911% in the last 12 months. It is now trading 1.52% lower to $4,124 as of 7:57 a.m. ET.