Ethereum Spot ETF Approved for Listing, Opening a New Era for Digital Assets

On July 23, 2024, at 9:30 AM Eastern Time, 9 Ethereum Spot ETFs officially began trading on the U.S. securities market, marking an important milestone for Ethereum digital assets. These ETFs are distributed across different exchanges:

CBOE Exchange has listed 5 ETFs:

• 21Shares Core Ethereum ETF (CETH)
• Fidelity Ethereum Fund (FETH)
• Franklin Ethereum ETF (EZET)
• Invesco Galaxy Ethereum ETF (QETH)
• VanEck Ethereum ETF (ETHV)

The Nasdaq Stock Exchange has listed an ETF:

• BlackRock's iShares Ethereum Trust (ETHA)

The New York Stock Exchange Arca electronic trading platform listed 3 ETFs:

• Grayscale Ethereum Mini Trust (ETH)
• ProShares Ethereum ETF (EETH)
• Bitwise Ethereum ETF (ETHW)

In addition, the U.S. Securities and Exchange Commission has approved Grayscale to convert its Ethereum Trust (ETHE) into a spot ETF.

In the first trading day, the total transaction volume of these ETFs reached $434 million within about 2 hours. Among them, the Grayscale Ethereum Trust performed the best, attracting $177.2 million in inflows. In contrast, the 21Shares Core Ethereum ETF had the lowest transaction volume, at only $4.69 million.

According to reports, ETF analyst Eric Balchunas stated that the total trading volume of these ETFs reached $112 million just 15 minutes after trading began. Although this figure is quite impressive, it is still only about half of the trading volume of the Bitcoin Spot ETF on its first day.

VanEck Ethereum ETF opened at $50.06, ranking first, while Grayscale Ethereum Mini Trust had the lowest opening price at $3.26. However, due to its lower share price, it became the most traded Ethereum Spot ETF. The average opening price of other ETFs ranged between $20 and $30.

Although the price of Ethereum (ETH) saw a slight increase after the start of ETF trading, the overall performance was mediocre. As of 00:00 Singapore time on July 24, 2024, the day's increase in ETH was 0.46%, with a market capitalization of approximately 3455.2 dollars.

Characteristics and Fees of Each ETF

These newly launched Ethereum Spot ETFs are initiated by asset management companies and are backed by qualified custodians holding spot ETH, relying on professional market makers to create and redeem shares. They vary slightly in terms of fees, but most ETFs may offer fee reductions or discounts in actual trading. The actual fees may vary depending on the securities broker chosen by the investor.

The following are the base rates for each ETF:

• 21Shares Core Ethereum ETF (CETF): 0.21%
• Fidelity Ethereum Fund (FETH): 0.25% (no management fee for the entire year of 2024)
• Galaxy Ethereum ETF (QETH): 0.25%
• Franklin Ethereum ETF (EZET): 0.19% (First $10 billion in assets free until January 31, 2025)
• VanEck Ethereum ETF (ETHV): 0.2%
• Grayscale Ethereum Mini Trust (ETH): 0.15%
• ProShares Ethereum ETF (EETH): 1.33%
• Bitwise Ethereum ETF (ETHW): 0.2% (0% for the first $500 million or the first 6 months)
• Grayscale Ethereum Trust (ETHE): 2.5%
• BlackRock's iShares Ethereum Trust (ETHA): 0.25%

Overall, most ETFs have a fee rate of around 0.25%, while Grayscale has the highest fee at 2.5%.

ETH Staking Issues

It is worth noting that these ETFs will not participate in ETH staking. According to reports, earlier institutions such as Fidelity, BlackRock, and Franklin Templeton had attempted to obtain approval from the U.S. Securities and Exchange Commission to include staking in ETF operations but were rejected. One main reason is that extracting ETH from the beacon chain typically takes several days, which does not align with the ETF's requirement for timely redemption of shares.

Looking to the Future

Bitwise Chief Investment Officer Matt Hougan stated that we have fully entered the ETF era of blockchain digital assets, and investors can now access about 70% of the digital asset market through low-cost ETFs.

VanEck's digital asset chief Kyle DaCruz believes that if Bitcoin is digital gold, then Ethereum is an open-source app store, serving as a gateway to numerous blockchain technology applications.

The research company Steno Research predicts that the Ethereum Spot ETF could attract between $15 billion and $20 billion in inflows during its first year on the U.S. securities market, comparable to the inflow amount of the Bitcoin Spot ETF within 7 months. This will undoubtedly bring new vitality and opportunities to the digital asset market.