Valkyrie Taps Into Ethereum Momentum With New ETF Filing

In a filing dated August 4, Valkyrie applied to add an Ethereum futures ETF to its Bitcoin Strategy ETF (BTF). However, it would seem this move was pushed back by the SEC as the asset manager has now filed a separate application to offer an Ether futures ETF.  

In an application dated August 16, Valkyrie seeks the United States Securities and Exchange Commission’s (SEC) approval to offer an Ethereum futures exchange-traded fund (ETF). 

If approved, the fund will not directly invest in Ether. Instead, it will focus on purchasing several ether futures contracts to match the total value of the ether underlying the futures contracts with the net assets of the fund. 

While this fund is relatively similar to the Bitcoin futures ETF, which has existed since 2021, it differs from the Spot Bitcoin ETF, which prominent institutional firms have filed for. Spot ETFs track the crypto asset’s price, while futures ETFs focus on the asset’s future contracts. 

Valkyrie categorically noted this fact as part of its application and stated that investors looking to invest in the price of ether directly should consider investments other than this particular fund.

The application also highlighted the risks involved in investing in this fund as, according to Valkyrie, “the Fund’s investments could decline rapidly, including to zero.” As such, investors should understand that they could lose their entire investment. 

As is common with applications such as this, applicants must prove to the SEC that the underlying asset has a regulated market of significant size. And Valkyrie’s filing stated that its fund would be guided by the futures contracts traded on the Chicago Mercantile Exchange (CME). 

Valkyrie failed to clarify the status of its initial filing in its most recent application. The asset manager had previously tried to add ETH futures contracts to its Valkyrie Bitcoin Strategy ETF (BTF) in a bid to gain a first-mover advantage over other applicants. 

Several other asset managers, including Bitwise, ProShares, Grayscale, and Volatility Shares, have also applied to offer an Ethereum futures ETF. However, it remains uncertain in what order the SEC is likely to approve (if it does) these applications, especially with this recent development. 

Just like Cathie Wood has suggested regarding the pending Spot Bitcoin ETF applications, the SEC can approve multiple applications at once, which will likely eliminate the first mover advantage, or it can decide to approve them in the order in which these applications came in. 

Despite expectations that the regulator will approve an Ether ETF this year, the probability of the SEC approving any of these applications remains uncertain as optimism dwindles.