It seems more likely that US regulators will be able to approve an ETF based on Ethereum Futures before one on physical BTC.
This is the hypothesis of Bloomberg Intelligence.
Summary
Differences between crypto ETFs
Several ETFs based on Bitcoin Futures have already been approved by the SEC this year, because they are financial products that follow a slightly different, and somewhat facilitated, approval process.
At this point, given that there are Ethereum Futures that are very similar to Bitcoin Futures, it is realistic to imagine that possible applications for the issuance of ETFs on ETH Futures could follow a similar, and relatively fast, approval procedure.
By contrast, the approval process for ETFs based on physical BTC is still decidedly lengthy and problematic, so much so that the SEC has opted for yet another postponement, particularly with regard to Valkyrie‘s application in this regard.
These are really two different processes, based on different rules. ETH and BTC futures contracts have already been approved for a long time, and in themselves do not pose any serious problems with regard to the custody of the underlying.
Conversely, ETFs based on physical cryptocurrencies are more problematic, precisely because they require very high levels of security to prevent the underlying from being stolen from the fund manager or being lost.
ETFs on Ethereum futures, towards rapid approval
According to Bloomberg Intelligence analyst James Seyffart, many consider a possible Bitcoin spot ETF to be superior to existing ETFs based only on BTC Futures contracts, but the SEC’s approval of it could be delayed until the end of next year, or perhaps even beyond. Instead, an ETF based on ETH futures contracts could be approved as early as the first quarter of 2022.
The fact is that the two BTC futures ETFs that already exist on the US market today have been very successful, so there are those who believe that an ETF on physical BTC could be even more successful. This does not detract from the fact that an ETH Futures ETF could probably also be very successful.
The regulatory uncertainty
A lot will depend on whether cryptocurrencies are regulated in the US, although this still seems a long way off.
The lack of clear-cut regulation makes it very difficult for the SEC to authorize funds that hold physical tokens and are also offered to millions of retail investors, who are often uninformed about the risks.
To date, there is still a lot of uncertainty in this regard, although the BTC and ETH spot markets are continually setting new records, and the two cryptocurrencies are now spreading everywhere in all financial markets around the world.
