A recent article by Bloomberg remarks that the US Securities and Exchange Commission (SEC) is set to endorse the first exchange-traded funds (ETFs) based on Ether futures. This would be a significant victory for several companies that have been seeking to offer these products for a long time.
The Approval Could be a Massive Milestone for the Crypto Community
The regulator is not likely to block the products, which would be based on futures contracts for the second-largest cryptocurrency. However, it is not clear who these “people familiar with the matter” are, specifically whether they are officials from the SEC or not.
The implication is that Ethereum will get a stock-traded product this October, just as the cryptocurrency potentially starts moving out of the bear market.
The Bitcoin futures ETF was approved at the top in 2021, with Ethereum likely to be the only cryptocurrency that joins while the market awaits a Bitcoin spot ETF. Regulators also recently allowed Coinbase to offer Bitcoin and Ethereum futures, with the Ethereum ETF to be based on CME futures.
Such futures launched in early 2018 for Bitcoin, again pretty much at the top, with the bear market that followed leading to some speculation that it was caused by the launch of the Bitcoin futures.
A bull market followed the launch of CME futures, with these futures losing much relevance where the market is concerned as crypto exchanges handle far more volumes. However, an Ethereum futures ETF will bring a new market to the second-largest cryptocurrency, and this time not quite at the top.
The futures are synthetics, so they don’t have to correspond to Ethereum’s price. In practice, however, these futures are hedged with spot Ethereum. When you buy a future, some of the funds go towards buying actual Ethereum.
As a result, demand for futures translates to demand for Ethereum, with the price of futures and spot remaining very tightly correlated due to arbitrage and hedging.
