Are you curious about the latest developments in the cryptocurrency world? Specifically, have you heard about the rising interest in the Ethereum ETF? In the fast-paced crypto market, Invesco and Galaxy Digital have partnered up to propose an Ethereum spot exchange-traded fund (ETF). This comes on the heels of their joint proposal for a Bitcoin equivalent in June.
Understanding the Invesco and Galaxy Digital Proposal
The proposed Invesco Galaxy Ethereum ETF aims to mirror the performance of the ether spot price. How do they plan to achieve this? By holding units of the cryptocurrency with an undisclosed custodian. In this arrangement, Invesco is the sponsor while Galaxy Digital acts as the execution agent, selling ETH to cover the Trust’s expenses.
The Growing Interest in Ethereum ETFs
Interestingly, this application is the fourth of its kind to reach the SEC’s desk recently. Earlier submissions came from Ark Invest/21Shares, VanEck, and Hashdex. The industry consensus seems to be that a spot ETF is the next significant step for crypto investment in the U.S., especially as an Ethereum futures product seems imminent.
VanEck and Valkyrie have already received approval this week. According to Bloomberg ETF analyst James Seyffart, they might soon be joined by Bitwise, ProShares, Hashdex, and Volatility Shares. Valkyrie initially announced that its Ethereum ETF would begin trading on Friday, but they encountered a snag with the SEC for buying Ether futures contracts prematurely. They have since agreed to liquidate their current ETH futures position and will repurchase contracts only after the fund goes live.
The Challenges Facing Spot Crypto ETFs
While futures ETFs have been greenlit by regulators, spot crypto ETFs remain elusive for U.S. investors. Invesco and Galaxy’s Bitcoin spot ETF application, submitted in June, has been delayed twice by the SEC. Similar delays have been experienced by rivals such as BlackRock, Bitwise, and Valkyrie.
The SEC now faces increasing pressure after losing a lawsuit to Grayscale. A federal court ruled the agency’s consistent denial of the company’s spot ETF product as “arbitrary and capricious,” considering the agency’s acceptance of futures ETFs. Bitwise, despite the court loss, amended its Bitcoin ETF application on Monday to account for potential future SEC rejections.
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