In a recent filing, Invesco, a prominent fund group managing assets totaling nearly $1.6 trillion, made a significant foray into the world of cryptocurrencies.
Notably, they unveiled their Invesco Galaxy Ethereum ETF, revealing their partnership with Galaxy Digital Funds, which will serve as the execution agent responsible for managing the sale of ether. What sets this ETF apart from others set to debut soon is its direct holding of ether, as opposed to being based on ether futures.
Invesco Galaxy Joins the Race for an Ethereum ETF
Invesco, in collaboration with Mike Novogratz’s Galaxy Digital, has submitted an application for an Ethereum (ETH) spot exchange-traded fund (ETF). This follows their earlier application for a similar Bitcoin (BTC) ETF in June.
According to their S-1 registration statement, the Invesco Galaxy Ethereum ETF aims to mirror the performance of the spot price of ether by storing units of the cryptocurrency with an undisclosed custodian. While Invesco acts as the Trust’s sponsor, Galaxy Digital serves as its “execution agent,” responsible for selling ETH to cover the Trust’s expenses.
This application marks the fourth Ethereum spot ETF proposal to reach the SEC in recent weeks, joining submissions from Ark Invest/21Shares, VanEck, and Hashdex.
The timing of these proposals is crucial, as Grayscale Investments recently achieved a significant legal victory against the SEC. This decision, well-received by crypto enthusiasts, may have expedited the development of spot ether ETFs.
Related: Grayscale Files for Ethereum Futures ETF
Furthermore, Invesco has been actively involved in the digital asset market for some time. Their partnership with Galaxy Digital, which began in September 2021, aimed to create crypto ETFs backed by physical assets. This alliance pledged to combine institutional-grade crypto management with global ETF expertise, potentially ushering in a new era for the crypto industry.
The industry has long advocated for a spot ETF as the next logical step for crypto investments in the United States, especially with the imminent launch of an Ethereum futures product.
VanEck and Valkyrie received authorization earlier this week, and there is speculation that Bitwise, ProShares, Hashdex, and Volatility Shares could follow suit on October 2nd.
Initially, Valkyrie announced that trading for its Ethereum ETF would commence on Friday, but it encountered issues with the SEC due to its purchase of Ether futures contracts before the official announcement. As a result, it agreed to unwind its existing ETH futures position and will not repurchase contracts until the fund goes live the following week.
Regulatory Challenges for Spot Crypto ETF Approval in the United States
While regulators have approved futures ETFs, spot crypto ETFs remain inaccessible to U.S. investors. Since submitting their application in June, the Securities and Exchange Commission (SEC) has twice delayed Invesco and Galaxy’s Bitcoin spot ETF application, along with those of competitors BlackRock, Bitwise, and Valkyrie.
Interestingly, while several countries have embraced spot crypto ETFs, the SEC remains cautious, delaying decisions such as the Ark 21Shares Bitcoin ETF.
As the crypto landscape evolves, various fund organizations are racing to introduce diverse crypto products. Ark Invest, for instance, aims to dominate the U.S. crypto ETF market with an extensive suite of offerings, potentially transforming how traditional financial users engage with digital assets.
The coming months are poised to be pivotal for the U.S. crypto ETF market, with multiple major players vying for supremacy. The decisions of regulatory bodies and the evolution of the market will undoubtedly shape the future of crypto investments.
Despite a recent legal setback, Bitwise has amended its Bitcoin ETF application to account for potential SEC rejections of similar products.
At the time of writing, Ethereum is trading positively at $1,667, buoyed by excitement surrounding the debut of futures ETFs. Ethereum boasts a current market cap of $200.78 billion, a 24-hour trading volume of $5.48 billion, and a 0.95% increase in the last 24 hours, with a circulating supply of 120.24 million ETH.
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