Bitwise Joins Ethereum Spot ETF Race, Files Application with SEC

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Crypto investment firm Bitwise has submitted an application to the Securities and Exchange Commission (SEC) to launch a spot Ethereum exchange-traded fund (ETF). 

This move positions Bitwise as one of many contenders in the race to introduce the first Ethereum spot ETF, following the successful launch of Bitcoin spot ETFs earlier this year.

According to the S-1 registration form filed by Bitwise, the proposed “Bitwise Ethereum Trust” would hold Ethereum and potentially engage in staking activities through trusted providers to earn additional rewards. 

Staking involves locking up ETH to secure the Ethereum network and validate transactions, with participants receiving newly minted ETH as a reward. 

Bitwise is publishing a new correlation analysis today as part of its new spot Ethereum ETF filing.

This is the first ETH correlation analysis to replicate the specific methodology used by the SEC in their evaluation of bitcoin, and the results are encouraging.

The correlation… pic.twitter.com/dOLh0F50BE

— Bitwise (@BitwiseInvest) March 28, 2024

Interest in Spot Ethereum ETFs Surge

Bitwise’s introduction into the Ethereum spot ETF competition aligns with the growing interest from traditional financial firms to offer such products. 

In recent months, industry giants such as BlackRock, Grayscale, and VanEck have also filed proposals with the SEC to launch their own Ethereum spot ETFs. 

The increasing number of applicants highlights the demand for investment products that offer exposure to the second-largest cryptocurrency without requiring investors to directly purchase and store it themselves.

Bitwise’s filing comes shortly after one of its executives, Matt Hougan, Chief Investment Officer, expressed doubt about the approval of an Ethereum spot ETF during the summer, contrary to popular expectations. 

Hougan suggested that a later launch date, possibly in December, might be more advantageous for spot Ethereum ETFs, allowing traditional finance (TradFi) more time to digest the recent Bitcoin ETF launches.

The most controversial thing I said on stage at @blockworksDAS today:

Spot Ethereum ETFs will gather more assets if they launch in December vs. if they launch in May. TradFi needs more time to digest the bitcoin ETFs.

— Matt Hougan (@Matt_Hougan) March 19, 2024

The SEC has delayed decisions on several high-profile Ethereum spot ETF applications, including those from BlackRock, Grayscale, Fidelity, Invesco, and Galaxy Digital. 

Initial predictions, such as James Seyffart of Bloomberg’s, anticipated delays until May 23, which was the deadline for the earliest applications from VanEck and Cathie Wood’s Ark Invest. 

However, Seyffart now believes that these applications will be denied.

“My cautiously optimistic attitude for ETH ETFs has changed from recent months,” he wrote in a recent post on X. 

“We now believe these will ultimately be denied May 23rd for this round. The SEC hasn’t engaged with issuers on Ethereum specifics. Exact opposite of Bitcoin ETFs this fall.”

Standard Chartered Says SEC Will Approve ETH ETFs by May

Despite the delays, some experts maintain optimism regarding the prospects of Ethereum spot ETFs. 

Standard Chartered, a British multinational bank, expects the SEC to approve such products by May, citing the lack of designation of ether as a security by the regulator. 

The bank also predicts that the price of ETH could reach $8,000 by the end of this year and $14,000 by the end of 2025, partially driven by the anticipated approval of spot ETFs.

Meanwhile, the Ethereum network has surpassed one million validators, with approximately 32 million Ether, worth around $114 billion, staked within the network.

The 32 million ETH staked represents approximately 26% of the total supply, highlighting the substantial commitment to Ethereum’s proof-of-stake (PoS) consensus mechanism.

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