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Valkyrie wins nod to add Ethereum futures to ETF as SEC delays Bitcoin call

Valkyrie wins nod to add Ethereum futures to ETF as SEC delays Bitcoin call
Snapshot
The US Capitol days before a likely government shutdown in Washington. The shutdown may impact ETF approvals. Credit: JIM LO SCALZO/EPA-EFE/Shutterstock
  • The SEC has approved asset manager Valkyrie to begin trading Ether futures.
  • The regulator moved to delay its decision on a spot Bitcoin ETF.
  • A potential government shutdown may impact ETF approvals, analysts said.

Happy Friday!

US investors now have access to Ether futures through an exchange traded fund. Asset manager Valkyrie was approved to add Ethereum futures to its existing Bitcoin ETF. The move comes as analysts predict pending Ether futures ETFs will be given the green light imminently.

Here’s why that matters.

Green lights

Valkyrie will begin to add Ether futures to its existing Bitcoin strategy ETF on Friday. The asset manager will allocate 10% of its fund to Ether initially, increasing this to 50% on Monday.

The decision is expected to be quickly followed by approval of a host of Ether futures ETFs.

VanEck, another asset manager vying for approval, released a video Thursday promoting its Ether futures ETF, which it said was “coming soon.”

Ethereum, the second-largest cryptocurrency by market capitalisation, has gained 2.7% since Thursday.

ETFs offer investors an affordable and convenient way to bet on the performance of stocks, commodities, and cryptocurrencies. They also tend to be highly liquid.

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The products are therefore expected to bring increased investment to the sector, although futures products are not as keenly sought after as are spot ones.

Futures contracts give investors a chance to speculate on what the price of an asset will be in a few months time.

Ether futures ETFs have been sought out by the crypto industry to allow investors to gain exposure to crypto assets without going through the difficulty of setting up crypto-specific infrastructure, such as wallets.

While Bitcoin futures ETFs have been available in the US for some time, an ETF that invests in spot Bitcoin has yet to be approved by the SEC.

The agency recently delayed its decisions on applications from Cathie Wood’s ARK Invest and fund manager Global X. Bloomberg Intelligence ETF analyst James Seyffart stated that he expected all remaining applications to be delayed before an expected government shutdown on October 1.

This would push back the deadline for most Bitcoin spot ETF applications to January — except for Global X’s application, which is set for review in November.

Ether futures ETF approvals may also have been accelerated to get in ahead of the shutdown, according to Eric Balchunas, an ETF analyst at Bloomberg Intelligence.

A US appeals court ruled that the SEC erred by denying Grayscale’s application for such an offering. That decision could pave the way for a spot Bitcoin ETF.

Mike Novogratz, founder of crypto trading platform Galaxy Digital, recently said the approval of a spot Bitcoin ETF is a matter of “when, not if.”

Crypto market movers

  • Bitcoin flirted with levels around $27,000 after it gained 2% since Thursday.
  • Ethereum jumped 3.3% as it traded around $1,670.
  • Solana’s SOL and Ripple’s XRP rallied overnight, up 5.5% and 7.4% respectively.

What we’re reading

Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.

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SECURITIES AND EXCHANGE COMMISSION (SEC)