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Crypto asset manager Grayscale confirmed that two spot Ethereum exchange-traded funds have officially started trading on the New York Stock Exchange, marking a milestone for investors and the broader ETF market. The launch occurred a day after the U.S. Securities and Exchange Commission signed the final approval for spot Ethereum ETF funds, allowing many issuers to bring their products to market.
Excitement Continues for ETF Process
Bloomberg analyst James Seyffart stated in a post dated July 22 that the Grayscale Ethereum Trust had not yet received official valid documents from the SEC but expected them to arrive on the morning the launch process would begin. ETHE, with its $9.19 billion worth of Ethereum, is currently the world’s largest Ethereum-based exchange-traded product. ETHE will charge investors a 2.5% management fee.
Grayscale’s second product, the Grayscale Ethereum Mini Trust, waived fees for the first six months or until net assets under management reached $2 billion. Once any of these thresholds are met, a 0.15% fee will take effect, making it the cheapest spot Ethereum ETF offered in the U.S. Grayscale’s general manager, John Hoffman, said in a statement:
“ETH and ETHE will allow investors to invest in Ethereum’s potential to create markets, transform financial systems, leverage decentralized finance (DeFi), and drive innovation through a trusted ETP packager.”
BlackRock, Fidelity, 21Shares, Bitwise, Franklin Templeton, VanEck, and Invesco Galaxy’s Ethereum ETF funds were also approved to start trading on Tuesday, July 23.
Notable Statements from Prominent Figures
On July 22, Grayscale transferred over $1 billion worth of Ethereum to Coinbase in preparation for the ETF funds’ launch. The transfer of 292,263 Ethereum, valued at just over $1.01 billion, was the same amount Grayscale said it would transfer from ETHE to the Ethereum Mini Trust in a filing on July 18.
Seyffart stated in an announcement in July that this move would help mitigate some potential Grayscale exits. Current ETHE holders will receive the new Ethereum-backed product at a 1:1 ratio without triggering a capital gains tax event. Seyffart and Bloomberg ETF analyst Eric Balchunas expect spot Ethereum ETF funds to gather between 10% and 20% of the flows seen by Bitcoin ETF funds since their launch just over six months ago.
However, Bitwise’s chief investment officer Matt Hougan is confident that spot Ethereum ETF funds will have a greater impact on Ethereum’s price than spot Bitcoin ETF funds have had on Bitcoin. Hougan predicts that Ethereum’s price will surpass its all-time high and exceed $5,000 before the end of 2024.
