Another Ethereum ETF Is Now Before the SEC

Kryptoin, an investment firm focused on digital assets, has filed an application with the Securities and Exchange Commission (SEC) for an Ethereum ETF. If approved, the Kryptoin Ethereum ETF Trust would be traded on the Cboe BZX exchange.

ETFs, short for exchange-traded funds, are investment vehicles that allow people to trade a group of securities just like they would buy or sell stocks. An Ethereum ETF, then, would be linked to the price of ETH, allowing investors to get exposure to the asset without having to worry about custody. The issuer takes a cut of the transaction fees.

Multiple companies—including VanEck, Fidelity, and Anthony Scaramucci’s SkyBridge Capital—have petitioned the SEC to begin allowing ETFs linked to the price of Bitcoin or Ether, but the agency has thus far demurred.

For now, the closest thing to an ETF in the U.S. is an investment trust, such as Grayscale’s GBTC Trust. But these differ in several key ways. Importantly, Grayscale is a closed-end fund; there’s only a certain amount of shares available and investors must hold them for months, leading to major differences between the price of the crypto asset and that of the crypto ETF share. 

Grayscale has been trading at a discount of 10%, meaning that you can buy it cheaper than you can buy actual Bitcoin. ETFs would trade at much closer to the price of the asset.

Canada approved its first Bitcoin and Ethereum ETFs earlier this year. Pro-crypto financial institutions are hoping the U.S. follows suit.

12 August 2021 21:37