Kelly Strategic Management, a Denver-based investment company, has applied for an exchange-traded funds (ETF) that will offer exposure to Ethereum futures contracts.
This move comes three months after ProShares and VanEck abruptly withdrew their ETF applications for ETH futures on August 12, 2013.
According to a filing made with the U.S Securities and Exchange Commission (SEC) on Nov. 29, the Kelly Ethereum Ether Strategy ETF will be investing in cash-settled Ether futures contract traded on the Chicago Mercantile Exchange.
Eric Balchunas, Bloomberg’s senior ETF analyst, noted today on Twitter that Kelly’s Ether ETF might only have a 20% chance of approval. He also questioned whether “the SEC is ready to take this new step.”
Balchunas believes that SEC chairman Gary Gensler “is not mentally ready” at this stage to approve any other Bitcoin futures ETF.
“During the August Bitcoin futures filing process, VanEck filed for Ether ETFs as well as ProShares. They were told by the SEC to withdraw them. It has been 3 months since the launch of 3 successful Bitcoin ETF futures ETFs.
Balchunas said that, if it were true that ProShares and VanEck had been told by the SEC to pull their Ether ETF filings because they exposed to crypto assets other that BTC, Kelly’s ETF would only have a 1% chance to be approved.
Just had quick chat with @JSeyff and our early, rough odds of approval of this ETF is about 20% unless this @twobitidiot rumor is correct, then we’d obv go way lower like 1% (altho we still see multiple ETFs holding $ETHE) https://t.co/Ba4yRMsGS6
— Eric Balchunas (@EricBalchunas) November 29, 2021
Jason Lowery, a researcher, commented that “I would be shocked if SEC approved ETH ETFs b/c tacitly signals acceptance ETH as an unregistered security.”
Related: CME introduces micro Ether Futures as ETH Nears ATH Above $4.4K
Although multiple BTC futures ETFs have been approved by the SEC in the second half of 2021 it seems that they are not ready to approve any fund that provides exposure to crypto beyond CME BTC Futures contracts.
Anna Paglia, the global head for ETFs, indexed strategies and global strategy at Invesco, highlighted this fact earlier in the month. She explained that the reason her firm pulled its BTC Futures ETF is that the SEC approves only Bitcoin ETFs that have 100% exposure to Bitcoin futures.
Invesco’s ETF aimed to offer a mixture of futures swaps and physical Bitcoin.