Crypto investment firm Bitwise filed an application with the Securities and Exchange Commission (SEC) today to offer a spot Ethereum ETF. Bitwise joins an increasingly crowded field of companies vying to bring the first Ethereum spot ETF to market following the successful launch of Bitcoin spot ETFs earlier this year.
According to the S-1 registration form filed by Bitwise, the proposed “Bitwise Ethereum Trust” would hold Ethereum (ETF) and may stake a portion of the fund’s assets through trusted staking providers to earn additional rewards. Staking—a practice that has drawn scrutiny by government regulators—involves locking up ether to help secure the Ethereum network and validate transactions, with participants earning newly minted ether as a reward.
Bitwise’s entry into the Ethereum spot ETF race comes amid growing interest from traditional financial firms. In recent months, asset management giant BlackRock, digital currency investment firm Grayscale, and VanEck have all filed proposals with the SEC to launch their own Ethereum spot ETFs. The increased competition reflects the potential demand for such products, as investors seek exposure to the second-largest cryptocurrency without the need to directly purchase and store it themselves.
The filing comes soon after a Bitwise executive predicted that approval of an Ethereum spot ETF would not come this summer, as many have predicted—and said that waiting until later in the year could be a good thing.
“Spot Ethereum ETFs will gather more assets if they launch in December versus if they launch in May,” Matt Hougan, Chief Investment Officer at Bitwise, in a recent tweet. “TradFi needs more time to digest the Bitcoin ETFs.”
The most controversial thing I said on stage at @blockworksDAS today:
Spot Ethereum ETFs will gather more assets if they launch in December vs. if they launch in May. TradFi needs more time to digest the bitcoin ETFs.
— Matt Hougan (@Matt_Hougan) March 19, 2024
The SEC has delayed decisions on several high-profile Ethereum spot ETF applications in recent months, including those from BlackRock, Grayscale, Fidelity, Invesco, and Galaxy Digital. Analysts like James Seyffart of Bloomberg originally predicted that delays would continue until May 23, the drop-dead deadline for the earliest applications from VanEck and Cathie Wood’s Ark Invest. He now thinks they will be denied.
My cautiously optimistic attitude for ETH ETFs has changed from recent months. We now believe these will ultimately be denied May 23rd for this round. The SEC hasn’t engaged with issuers on Ethereum specifics. Exact opposite of #Bitcoin ETFs this fall. https://t.co/TyAzAOrAC5
— James Seyffart (@JSeyff) March 19, 2024
Despite the delays, some experts remain optimistic about the prospects for Ethereum spot ETFs.
British multinational bank Standard Chartered expects the SEC to approve such products by May, citing the regulator’s lack of designation of ether as a security. The bank also predicts that the price of ether could reach $8,000 by the end of the year and $14,000 by the end of 2025, driven in part by the anticipated approval of spot ETFs.
The potential impact of Ethereum spot ETFs on the cryptocurrency market could be significant. Since the approval of Bitcoin spot ETFs in January, billions of dollars have flowed into these funds, pushing up the price of the leading cryptocurrency. A similar effect may be seen with Ethereum, as traditional investors gain a more accessible avenue to invest in the asset.
