About six months have passed since the Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETFs. And on July 23, the SEC allowed the first spot Ethereum ETFs to start trading.
What is a spot Ethereum ETF?
A spot Ethereum ETF is an exchange-traded fund that invests directly in Ethereum, the world’s second-largest cryptocurrency by market capitalization after Bitcoin.
Ethereum has many features that distinguish it from Bitcoin. Its blockchain doesn’t just host Ether coins; it’s also home to decentralized apps and non-fungible tokens that run on the Ethereum protocol. Ethereum also now uses a proof-of-stake system to create new coins — a more energy-efficient system than the proof-of-work process behind Bitcoin mining. (Ethereum also used a proof-of-work system until it switched to proof-of-stake in 2022.)
There were already Ethereum strategy ETFs on the market before the approval of spot ETFs, which indirectly track the price of Ether using futures contracts. However, these may not track the cryptocurrency’s price quite as accurately as a spot Ethereum ETF, and they may charge higher fees. The spot Ethereum ETFs approved in July are the first of their kind.
Spot Ethereum ETFs
To date, eight different spot Ethereum ETFs have started trading. They are listed below, along with the name and ticker symbol of each ETF, each ETF’s fee and any promotional fee waivers.
Fund name & symbol | Fee | Notes |
|---|---|---|
Grayscale Ethereum Mini Trust (ETH) | 0.15% | Fee waived for first six months of trading or first $2 billion in fund assets, whichever comes first. |
Franklin Ethereum Trust (EZET) | 0.19% | Fee waived until January 31, 2025 or first $10 billion in fund assets, whichever comes first. |
VanEck Ethereum Trust (ETHV) | 0.20% | Fee waived for first 12 months of trading or first $1.5 billion in fund assets, whichever comes first. |
Bitwise Ethereum ETF (ETHW) | 0.20% | Fee waived for first six months of trading or first $500 million in fund assets, whichever comes first. |
21Shares Core Ethereum ETF (CETH) | 0.21% | Fee waived until Jan. 23, 2025, or first $500 million in fund assets, whichever comes first. |
Fidelity Ethereum Fund (FETH) | 0.25% | Fee waived until Dec. 31, 2024. |
iShares Ethereum Trust (ETHA) | 0.25% | Fee reduced to 0.12% until July 23, 2025, or the first $2.5 billion in fund assets, whichever comes first. |
Invesco Galaxy Ethereum ETF (QETH) | 0.25% | N/A |
Source: Fund websites. Data is current as of Sept. 2, 2024, and for informational purposes only.
The ninth spot Ethereum fund
Technically, there are nine investment funds on the market today that track the spot price of Ethereum, but the ninth isn't a conventional ETF. The Grayscale Ethereum Trust (ETHE), not to be confused with its Mini Trust ETF cousin, is an exchange-traded product (ETP) whose market price may diverge from its net asset value, potentially giving investors a premium or discount on its Ether holdings.
ETHE is the largest spot Ethereum fund in the world, accounting for more than 2% of the total market capitalization of Ether at the time of writing. Its expense ratio is 2.50%, and it currently has no fee waiver promotions. It was also approved for exchange trading on July 23.
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The Ethereum ETF price war
In the days leading up to the Ethereum ETF approvals in July 2024, Ethereum ETF issuers engaged in a race to the bottom in terms of fees. Many issuers filed multiple amended registration statements lowering their fees to try to undercut their competitors, some of whom responded days later by filing their own amended registration statements with even lower fees.
Others announced last-minute promos — such as reducing their fee to zero for the first six months of trading — in an effort to distinguish themselves as the cheapest Ethereum ETF. This fast-paced exchange of fee cuts and promos continued into the days just before the SEC’s approval announcement, and could continue in the days to come.
With that in mind, it’s worth double-checking any information you find online about Ethereum ETF fees and promos. Any numbers you see online could be outdated by the time you read them.
Ethereum strategy ETFs
We define an Ethereum strategy ETF as any ETF that invests at least 50% of its assets in Ether futures. There are seven such funds on the market today, and they’re listed below from lowest to highest fee.
Fund name & symbol | Fee | Notes |
|---|---|---|
VanEck Ethereum Strategy ETF (EFUT) | 0.66% | Invested in Ether futures. |
ARK 21Shares Active Ethereum Futures Strategy ETF (ARKZ) | 0.70% | Invested in Ether futures. |
Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) | 0.90% | Invested in Bitcoin and Ether futures. Fee reduced to 0.85% until Oct. 2, 2025. |
Bitwise Ethereum Strategy ETF (AETH) | 0.92% | Invested in Ether futures. Fee reduced to 0.85% until October 2, 2025. |
Valkyrie Bitcoin and Ether Strategy ETF (BTF) | 1.24% | Invested in Bitcoin and Ether futures. |
ProShares Ether Strategy ETF (EETH) | 1.33% | Invested in Ether futures. Fee reduced to 0.95% until Oct. 31, 2024. |
ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE) | 1.33% | Invested in Bitcoin and Ether futures. Fee reduced to 0.95% until Oct. 31, 2024. |
Sources: Fund websites. Data is current as of Sept. 2, 2024, and for informational purposes only.
What do ETF approvals mean for Ethereum?
The price of Ether is up more than 40% this year at the time of writing. Will the recent ETF approvals add to that momentum? That remains to be seen.
Ethereum ETFs give 401(k) and IRA investors a new way to invest in crypto. Americans collectively hold nearly $40 trillion in retirement accounts, and many of those retirement accounts do not allow trading of cryptocurrencies themselves.
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However, the market's short-term reaction to the approval of Ethereum ETFs has been muted so far. Between 9:30 a.m. and 4:00 p.m. Eastern time on July 23 — the ETFs' first trading day —the price of Ether actually dropped slightly.
Ethereum ETFs vs. Ethereum itself
Spot Ethereum ETFs may have some advantages over other ways of investing in Ethereum. As we’ve discussed, they may offer investors who cannot buy Ethereum directly (such as retirement account investors) a cheaper and more reliable way to invest in Ethereum than the pre-existing slate of Ethereum strategy ETFs.
However, it’s important to note that Ethereum ETFs do have some disadvantages compared to owning the cryptocurrency itself. Investors in the current crop of Ethereum ETFs will not receive staking rewards (a sort of interest payment or dividend for Ether holders).
If you want that feature of Ethereum, you’ll need to invest in the cryptocurrency itself.
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The editor owned Ether at the time of publication.
