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The novel structure of this proposed ETF is a first of its kind, as it includes ether futures structured under the 1933 Securities Act, diverging from the norm where competing funds are filed under the 1940 Investment Act. While ETFs under the 1940 act can invest in securities, those under the 1933 act can invest in commodities. This distinction opens new doors for investors interested in commodities like ether.
By holding ether futures contracts and spot ether, the ETF aims to reduce its reliance on the spot market. This strategy mitigates concerns about potential manipulation in unregulated ether spot exchanges, according to the SEC filing. The fund would be managed by Toroso Investments.
“As its investment thesis has evolved and improved, there has been more demand to access ETH in familiar, regulated investment products like ETFs,” said Samir Kerbage, Hashdex’s chief investment officer.
The move comes amid a surge of firms seeking to gain a first-mover advantage among cryptocurrency investors and convince the SEC that such funds are safe investment vehicles. Hashdex previously filed to convert its bitcoin futures ETF into a spot bitcoin fund in August. However, while the SEC allows ETFs that track bitcoin futures contracts, it has consistently blocked over 30 applications for an ETF that tracks spot bitcoin.
Other asset managers including Bitwise Asset Management and Valkyrie Investments have also applied for ether futures ETFs. Reports suggest that the SEC has warmed up to the idea of considering an ether futures fund. For these funds to be approved, the agency would have to explicitly designate whether they consider ether a security or a commodity, according to Sumit Roy, an analyst at etf.com.
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