No more Ethereum ETFs? Proshares, VanEck withdraw Ether ETF proposals

Just two days ago, fund managers VanEck and ProShares filed with the US Securities and Exchange Commission (SEC) to bring Ethereum Exchange Traded Funds (ETFs) to the US markets. However, the two companies announced on Friday that they had decided to withdraw their active applications.

Similar to the dozen of Bitcoin ETFs awaiting approval, the proposed ETFs would have been based on ether futures contracts alongside other financial products and “pooled” investment vehicles that allow further exposure to Ethereum.

“The change relates to Vaneck Ethereum Strategy ETF, a series of the trust,” reads the amended SEC filing. “No securities were sold in connection with the amendment and the Trust has decided not to continue offering this series at this time.”

A filing with ProShares followed a similar pattern whereby Proshares would “withdraw the change because it chose not to continue the registration process for the new series associated with the change”.

Now ProShares is withdrawing its Ether ETF registration. The SEC may have had a godfather-style conference call. Ether, you are out. pic.twitter.com/ZZ4b5zpx54

– Eric Balchunas (@EricBalchunas) August 20, 2021

While it remains unclear what prompted the two firms to abruptly halt their efforts, many believe there have been talks with regulators like the SEC. With the commission further delaying its review of Bitcoin ETFs, it is certainly possible that firms have been told that approval is unlikely anytime soon.

Is Ethereum still too small for the SEC?

As the second largest cryptocurrency by market capitalization, Ethereum has continued to pique the interest of crypto enthusiasts and investors alike. However, in a larger institutional setting, Ether is still dwarfed by Bitcoin.

With a market cap of $ 385 billion and a 340% YTD return, Ethereum has continued to make strides to catch up with its older brother Bitcoin. However, on Wall Street, Bitcoin still seems to have the upper hand. Source: ETHUSD on Tradingview.com

Accordingly Coin Gecko, there are over 27 publicly traded companies holding Bitcoin with a cumulative value of $ 9.7 billion. In contrast, Ethereum has a total of 3 companies in the global public market – with only one from the US. Funnily enough, the number would have been zero if Coinbase hadn’t recently announced it would buy $ 500 million in crypto assets.

Related reading | Coinbase will add over $ 500 million in cryptocurrencies to the balance sheet

Also with a Total market value of $ 208 million, Ethereum has a fraction of Bitcoin’s influence on businesses. All of this information seems to indicate a lack of urgency to give Ethereum the green light as a security – at least before Bitcoin.

With Ethereum being pushed aside, all eyes seem to be on Bitcoin futures products. Earlier this month, SEC chairman Gary Gensler stated that with further enforcement of rules that ensure investor protection, a Bitcoin ETF could soon become a reality.

In August alone, Invesco, ProShares, VanEck, Galaxy Digital and Valkyrie Funds applied for their respective Bitcoin ETFs. Wisdomtree, NYDIG, and VanEck still stay at the top of the pile, with the latter Submitted at the end of 2020. It remains to be seen whether there will be any further delays that could set back the arrival of the long-awaited crypto ETFs on the US markets.

Featured image from UnSplash

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