VanEck & ProShares Pull Ether ETF Filings

August 20, 2021

Just two days after filing paperwork for the first futures-based ether ETFs, VanEck and ProShares have suddenly withdrawn their applications.

The issuers are no longer seeking approval for the VanEck Ethereum Strategy ETF and the ProShares Ether Strategy ETF, reducing the likelihood that an ether ETF launches in the U.S. anytime soon.

While neither VanEck nor ProShares has commented on the withdrawals, the simultaneous moves by both firms suggests that the Securities and Exchange Commission may have made it clear to them that it is unlikely to greenlight a futures-based ether product for now.

There have been multiple waves of filings and withdrawals for various cryptocurrency ETFs over the years as issuers attempted to modify their products in a way that appeased the SEC, but the regulator has pushed back each time.

Most recently, SEC Chair Gary Gensler strongly hinted that he and the commission may consider approving a futures-based bitcoin ETF. That led to a flood of filings for those types of products.

VanEck and ProShares presumably hoped that the SEC’s openness to a futures-based crypto ETF extended to ether. It now seems that it doesn’t.

Outstanding Filings

Bitcoin predates Ethereum by more than six years and has a more established futures market associated with it.

Still, there is no U.S.-listed bitcoin ETF available today, though the number of bitcoin ETF filings keeps piling up.

Currently, there are 17 bitcoin ETF filings in the pipeline, six of them for futures-based products. There are also three remaining ether ETF filings even after today’s two withdrawals, all of them funds that would directly hold ether.

Outside The US

While the SEC has been reluctant to approve any cryptocurrency ETFs, especially those that hold ether, regulators in other parts of the world haven’t been as strict.

There are several ether ETFs listed in Europe and Canada, including the $1.2 billion Ether Tracker Euro in Sweden and the $510 million CI Galaxy Ethereum ETF in Canada.

But it’s the Grayscale Ethereum Trust (ETHE), with $9.5 billion in assets, that dwarfs them all. ETHE is an over-the-counter product quoted on the OTCQX. It’s not an ETF, but is just as simple to buy through a traditional brokerage account.

ETHE has thrived despite its shortcomings, which include the potential for large premiums and discounts to develop, leaving a big gap between the trust’s net asset value and its share price.  

Convenience seems to have trumped ETHE’s shortcomings, and the product has become many U.S. investors’ preferred way to purchase ether in lieu of the yet-to-be-approved U.S.-listed ether ETFs.

Email Sumit Roy at [email protected] or follow him on Twitter @sumitroy2

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