April 19, 2024
Altcoins News

Valkyrie Submits Application for Ethereum Futures ETF to the SEC

Asset management company Valkyrie officially filed for an exchange-traded fund (ETF) centred on Ethereum (ETH) futures with the U.S. Securities and Exchange Commission (SEC) on August 16. This application comes as an addition to Valkyrie’s earlier move to align its investment strategy for a Bitcoin (BTC) futures ETF with regulatory requirements.

The ETF, as outlined in the documents submitted Wednesday, will not directly invest in Ether, the native cryptocurrency of the Ethereum blockchain. Instead, it plans to acquire a range of ETH futures contracts. These contracts allow investors to speculate on the future price of Ethereum.

Valkyrie’s application noted that Ether can be considered either a currency or a digital commodity, depending on its specific application in transactions. While some retailers accept Ether as a form of payment, its use for commercial transactions is relatively limited. The application also pointed out Ether’s potential use as a store of value, acknowledging its history of price volatility.

In terms of investment strategy, the ETF will primarily invest in Ether futures contracts, while the remaining assets will be directed towards cash, cash-like instruments, or high-quality securities such as U.S. government-issued bills, notes, bonds, money market funds, and corporate debt securities.

According to the application, the ETF’s investments in Ether futures contracts will adhere to position limits set by the Chicago Mercantile Exchange, allowing a maximum of 8,000 contracts per month. These futures contracts are standardized agreements for buying or selling an asset at a predetermined price in the future.

Valkyrie is not alone in seeking to launch an Ethereum futures ETF. Other major asset management firms, including Grayscale, VanEck, Bitwise, Volatility Shares, ProShares, and Round Hill Capital, have also submitted applications to introduce Ethereum futures ETFs to the U.S. market. This trend follows the anticipation of regulatory approval for a Bitcoin ETF in the U.S., with various investment companies vying for a spot in the emerging market.

While the SEC’s stance on cryptocurrency ETFs remains a point of interest for both investors and the industry, the submission of numerous applications indicates a growing interest in making crypto investments more accessible through traditional financial channels.

Image by Benzoix on Freepik

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