Vledge Investments wins SEC approval to launch first Ethereum ETF

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Vledge Investments wins SEC approval to launch first Ethereum ETF

Valkyrie Investments has won the battle to offer the first Ethereum futures fund, a key development in the mainstreaming of digital assets in the U.S., FOX Business has learned.

The Nashville-based assets manager is the first of nine issuers to receive approval from the SEC to provide investors with the opportunity to bet on the future price of the world's second-largest digital asset through a so-called ETF. The ethereum blockchain's native token is Ethereum, and it is worth around $1,650 per token at the time of its release.

Valkyrie is famous for its Bitcoin Mining ETF, which is currently the best performing crypto-related ETF in the U.S.

ETFs, which can be used to increase retail investment in crypto, are seen as a way to increase retail participation in crypto, since they are traded on top exchanges like the Nasdaq and the New York Stock Exchange. Since October 2021, the SEC has allowed trading of bitcoin ETFs that are priced off futures contracts. Only a small number of firms are looking to explore digital asset investing by offering ether derivatives.

Along with Valkyrie, eight other issuers have also filed applications to launch ether ETF products, such as VanEck, Grayscale Investments and Bitwise.

Some of these firms, such as Wall Street giants BlackRock and Fidelity, are looking to go a step further by launching a spot Bitcoin ETF. The deal would allow a broad range of investors to access Bitcoin's spot price rather than its future value, which can only be purchased by so-called accredited investors who have substantial investable assets. Three firms have also proposed spots-ethyl ETFs.

Wall Street's top cop so far has been reluctant to approve any sort of spot ETF, as it would mean introducing cryptocurrency into the mainstream, something Chairman Gary Gensler has vehemently opposed. A spot ETF would allow all investors to buy the product through their brokerages. In the past, bitcoin futures trading was reserved for accredited investors.

The SEC delayed its decision on whether to approve the proposed rule change that would allow Ark 21Shares to launch its own spot bitcoin ETF, a hedge fund owned by tech investor Cathie Wood. It also delayed a decision on Global X ETF's application. The rest of applications, including BlackRock's, have decision deadlines of mid-October, although many in the industry anticipate the SEC to delay decisions on those as well.

Valkyrie's plan is to convert its current Bitcoin futures ETF into a combined fund that offers both bitcoin and ether futures. The fund will be named the Valkyrie Bitcoin and Ether strategy ETF, FOX Business has learned, but the Nasdaq ticker BTF will remain unchanged. The fund will begin to opportunistically purchase ether futures on Thursday, with a final name change effective Tuesday morning.

Valkyrie's Chief Investment Officer, Steven McClurg, said in a statement.

Valkyrie had originally planned to begin trading its fund on October 3, but Friday's possible government shutdown has caused the SEC to accelerate the launches of ethereum futures ETFs in the event the agency is forced to scale back operations.

Unless Congress comes to an agreement on funding, the federal government is scheduled to discontinue most of its operations on Saturday, furloughing nearly two million federal workers.

Gensler said that companies planning to go public should do so before Friday, as the shutdown would force the agency to furlough around 92% of its employees and operate with a skeletal staff.

''T have somebody, really at full force, overseeing the markets or companies that want to go public,'' Gensler said.

The same is true for the applicants for ether futures. It is uncertain how many of the current applicants will launch in the future, but according to McClurg, the SEC has asked applicants to update their filings with any additional information by Friday afternoon.