According to Blockworks, while the future of spot ether ETFs remains uncertain, issuers have confirmed their intentions to introduce other types of ETH funds. Volatility Shares, ProShares, and Defiance, ETF issuers, have recently submitted plans to launch leveraged funds that would hold ether futures contracts. Last year, Volatility Shares continued with its ether futures ETF proposal when others stopped similar initiatives. The firm has outlined plans to launch a 2x Ether Strategy ETF on April 5. This fund aims to profit from rises in the price of ether futures contracts traded on the Chicago Mercantile Exchange (CME) to try to generate twice the performance of ETH, as per a Securities and Exchange Commission disclosure. It may also invest in swap agreement and reverse repurchase agreement transactions.
The ProShares Ultra Ether ETF would aim for daily investment results that correspond to twice the daily performance of the Bloomberg Ethereum Index, according to a filing on Monday. The firm's UltraShort Ether ETF would seek results in line with two times the inverse of the daily performance of the same benchmark. Neither proposed fund invests in, or shorts, ether directly, the disclosure states. Instead, they would invest in cash-settled ether futures contracts traded on commodity exchanges registered with the Commodity Futures Trading Commission. The planned ProShares ETFs would also enter into swap agreements that provide exposure to ether.
Finally, a 2X Ether Strategy ETF by fund group Defiance aims for daily investment results that correspond to twice the return of the CF Rolling CME Ether Futures Index for a single day. The fund's disclosure notes that the proposed ETF is riskier than alternatives that do not use leverage. Neena Mishra, director of ETF Research at Zacks Investment Research, told Blockworks she would not be surprised to see the leveraged ether ETFs approved before the launch of spot products. The SEC is set to rule on spot ether funds in May, though some industry watchers have said the chance of approval by that time appears to be dwindling.
The leveraged ether futures ETF filings come about six months after the launch of the first US ether futures funds in October. These funds saw initial demand that some industry watchers described as underwhelming. According to ETF.com, the combined assets under management (AUM) of the three pure ether futures ETFs by ProShares, VanEck and Bitwise amount to approximately $110 million. Among them, the ProShares fund is leading with an AUM of around $70 million. Mishra said she doesn’t expect the leveraged ether futures ETFs to attract much interest given the lukewarm demand for well-performing ETH futures funds. Investors are likely to wait for pure exposure to ether via spot ETFs rather than investing in futures-based products, she added. Once those spot ETFs become available and gather a significant amount of assets, investors will then look for ways to hedge or amplify their returns using leveraged products.