VanEck Submits Ethereum Strategy ETF Application to the U.S. SEC Tracking ETH Futures

19. Aug 2021 Posted by Akolkar B on News

On Wednesday, August 18, fund manager VanEck filed for an Ethereum-based exchange-traded fund (ETF) that would attempt to bypass U.S. regulators' crypto ETF blockade by trading indirectly.

Dubbed as the Ethereum Strategy ETF, the fundwould invest in Ether futures contracts through a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands. The Fund may also invest in pooled investment vehicles, including Canadian ETFs and exchange-traded products that provide exposure to ETH through the Subsidiary. The only limitation the firm sets is when it comes to buying the digital asset itself.

According to the principal investment strategies provided in the filing, it says "The Fund is an actively managed exchange-traded fund ("ETF"). It seeks to achieve its investment objective by investing, under normal circumstances, in Ether ("ETH"), futures contracts ("ETH Futures")." 

Adding more, it says, "as well as pooled investment vehicles and exchange-traded products that provide exposure to ETH (together with ETH Futures, "ETH Investments"). The Fund does not invest in ETH or other digital assets directly."

The Fund is classified as a "non-diversified" fund under the 1940 Act. Furthermore, the Fund likely carries more investor protections than its 33 Act counterpart, which will be an important distinction for the U.S. regulator.

SEC could look more positively upon Bitcoin ETFs that only trade futures contracts. Ether (1Ether = $3005.94) and bitcoin (1BTC = $44799.90) are the only two crypto-assets approved for futures trading in the U.S.

The firm also proposed that the fund would trade a broad array of Ether products.

This year in August, VanEck had resubmitted a prospectus with the U.S. SEC for a Bitcoin ETF with minor amendments hoping for a positive outcome. Previously VanEck attempted to list such a fund with the SEC in 2017.

Recently, VanEck also filed for a Bitcoin Strategy ETF that will invest in Bitcoin Futures provided by the CME Group. Recently, SEC chair Gary Gensler stated that Bitcoin ETF approval could see a green light provided that are linked to the Bitcoin Futures offered by CME Group.

However, it is for the first time that an Ethereum Strategy ETF application has come to the SEC.