A Trio of Ethereum ETFs Set to Launch in North America

It took years for regulated cryptocurrency investment products to hit the mainstream. But in Canada, things are heating up fast. Fresh off the launch of three Bitcoin exchange-traded funds (ETFs) earlier this year, Canada has now approved three more funds: this time, Ethereum ETFs. 

The ETFs, which will be available on Toronto’s stock exchange (TSX), will give investors exposure to the second biggest cryptocurrency by market cap, Ethereum—or Ether. 

The companies behind the three separate ETFs are Evolve ETFs, Purpose Investments, and CI Global Asset Management (which is working with Galaxy Digital on its product.) Purpose and Evolve already have Bitcoin ETFs trading on the TSX. 

All three Ethereum ETFs will be available next Tuesday. 

ETFs are products that allow investors to buy shares that represent a certain asset—in this case, Ethereum. Investors can trade them continually throughout the day but don’t have to worry about the tricky stuff that comes with holding crypto, like storage.

A Bitcoin ETF in the US is long-awaited. There is currently a long-list of high-profile companies applying to the Securities and Exchange Commission for Bitcoin ETF approval; eight firms—including Galaxy Digital—are awaiting approval. 

But the SEC has repeatedly rejected applications from companies that want to set one up. The SEC claims that the Bitcoin market can still be easily manipulated, and in its rejection of a Bitcoin ETF application from Bitwise in October 2019 casted doubt that a “real” Bitcoin market even exists.

Regulators in Canada evidently disagree. The country is now a hotspot for cryptocurrency ETFs. Earlier this year, three Bitcoin ETFs were approved in the north American country. Two broke records with their trading volumes: Purpose trading $80 million in its first hour and Evolve raised $421 million in just two days.  

Analysts say it’s likely the Ethereum products will also be popular. Bloomberg ETF research analyst James Seyffart told Decrypt: “There are a lot of people who are anti-crypto ETF but there are a lot of benefits. ETFs allow people to invest in the cryptocurrency ecosystem while staying on the financial guardrails—the traditional financial ecosystem,” he said.

“Ironically, some cryptos are trying to break that but no matter how you look at it, there are tens of trillions of dollars in these traditional financial ecosystems and if you want to get access to crypto, the easiest way to do it is invest in these funds,” said Seyffart.

“I think they will be a success because there is obviously a demand for these crypto assets within the traditional financial ecosystem and the ETF is a much more efficient structure than the Closed End funds and Trusts that currently trade in the US and Canada.”

Purpose today announced its new product in a statement. It said that it will sell three classes of shares on Toronto’s stock exchange (TSX):Canadian dollar currency hedged units (ETHH), Canadian dollar non-currency hedged units (ETHH.B), and US dollar units with ticker units (ETHH.U).

“While Bitcoin tends to get a lot of attention as it was the first major cryptocurrency, what Ether and the Ethereum ecosystem represent is one of the most exciting new technology visions today in society,” Purpose’s founder and CEO, Som Seif, said in a statement.  

While head of asset management at Galaxy Digital, Steve Kurz, said: “The CI Galaxy Ethereum ETF gives investors a simplified path to benefit from the explosion of decentralized applications being built on Ethereum.”

CI and Galaxy’s stocks will be listed as ETHX.B in Canadian dollars (unhedged) and ETHX.U in US dollars.

Evolve’s ETF will trade on the TSX as ETHR. The company said that “similar to Bitcoin, investors will now be able to trade Ether as simple as buying shares through their bank or brokerage.” 

All three claim to be the “world’s first” Ethereum ETF—but that isn’t entirely true. In Switzerland, there are two Ethereum ETFs, CoinShares Physical Ethereum and 21Shares. Both are referred to as ETPs but essentially do the same thing as the ETFs in Canada, according to analysts who spoke to Decrypt.

So, with Canada seemingly in a rush to approve crypto ETFs, will the US be next?

“I think we’re going to see a US Bitcoin ETF this year, for sure,” added Seyffart. “That’s my personal opinion and the consensus opinion right now.”