Just six months after the Spot Bitcoin ETF got approval, the SEC approved Spot Ethereum ETF on July 23, and since the approval, the topic of Ethereum ETF has been one that is stirring the crypto community.
Many are used to the term “Spot ETF”, but others are hearing the word “Spot ETF” for the first time, and this might seem a little bit confusing for them, especially when combined with Ethereum, which is Ethereum Spot ETF.
So, what exactly is Ethereum Spot ETF, and how can you get started with it? Continue reading to find out.
What is Spot Ethereum ETF
Before delving into the specific instance of Spot Ethereum ETF, it is crucial first to understand what ETFs are in general, how they work, and what type of investment they provide to people who buy them—understanding the principles of how ETFs work is also necessary to determine what influence this product may have on $ETH.
Exchange-traded funds (ETFs) are investment products that trade on exchanges and offer access to different markets. ETFs provide more regulated and accessible access to various financial markets, including commodities, indices, stocks, and cryptocurrency.
There are generally two ETF types: Spot ETF and Future ETF. Spot ETFs, sometimes known as physical ETFs, seek to monitor the price of a product by holding the real thing. Spot ETFs are meant to give investors direct exposure to the product’s price changes.
Futures ETFs, often known as derivatives-based ETFs, do not own the underlying product. Instead, these futures ETFs monitor the price of futures contracts, which lets traders bet on an asset’s future price without owning it.
Ethereum ETFs (also known as Ethereum Exchange Traded Funds) are financial products that permit investors to invest in Ethereum without purchasing cryptocurrency. These funds genuinely possess Ethereum and duplicate its price.
In other words, they usually acquire and hold Ethereum (ETH) as the underlying asset, and investors who purchase ETF contracts receive a proportional stake in the fund’s value.
Spot ether ETFs are more straightforward and transparent than ETFs that invest in derivatives or a diversified portfolio of cryptocurrencies, such as ether futures ETFs. Their goal is to closely track the price of Ether, giving investors direct exposure to the cryptocurrency without the need to purchase and store it themselves.
Ethereum spot ETF reflects the value of Ethereum, and, therefore, the value is the same. Hence, if Ethereum prices fall, this ETF will fall accordingly and vice versa.
SEC Approved Ethereum Spots ETF and Their Fees
The SEC approved 8 Ethereum Spot ETFs, and they are as follows with their fees:
1. Grayscale Ethereum Trust
Grayscale, the world’s largest crypto asset management, was among the first to offer Ether as a mutual fund-style product.
The fund charges a management fee of 0.15% for investing in Ethereum Spot ETF.
2. BlackRock’s iShares Ethereum Trust ETF (ETHA)
BlackRock, the world’s largest asset manager with $10 trillion in assets under management, is a key player in the exchange-traded fund market.
The iShares Ethereum Trust has established a fee waiver scheme to lower the initial investment cost and attract more investors. ETHA charges a 0.25% sponsor fee with a one-year waiver, which is reduced to 0.12% for the first $2.5 billion assets under management (AUM).
3. Fidelity Ethereum Fund (FETH)
Fidelity Investments is a leading provider of corporate retirement plans, with 23 million 401(k) participants.
For trading Ethereum Spot ETF, Fidelity charges are set at 0.25%.
4. Bitwise Ethereum ETF (ETHW)
Bitwise has introduced the Bitwise Ethereum ETF (NYSE: ETHW), promising to give 10% of its proceeds to Ethereum developers.
For investment in Ethereum Spot ETF, a minimal 0.20% management fee is applied to ETHW’s first $500 million in assets, with 0% for the first six months.
5. Franklin Ethereum ETF(EZET)
Franklin Templeton, a multinational asset management firm, has launched the Franklin Ethereum ETF (EZET) on the Chicago Board of Options Exchange (CBOE).
Fees will be waived to 0.00% on the first $10.0 billion in fund assets until January 31, 2025. The post-waiver charge would be 0.19 percent.
6. VanEck Ethereum ETF(ETHV)
VanEck, a $90 billion investment management business, was the first to propose a US-listed spot ether exchange-traded fund in 2021.
It has created the VanEck Ethereum ETF (Cboe: ETHV), which offers 0% fees until July 22, 2025, or the first $1.5 billion in assets under management. Following that, there will be a 0.20 percent fee.
7. Invesco Galaxy Ethereum ETF(QETH)
Invesco, a global leader in exchange-traded products (ETPs), has introduced the Invesco Galaxy Ethereum ETF (Cboe: QETH). The cost for the Invesco Galaxy Ethereum ETF (QETH) is 0.25%.
8. 21Shares’ Core Ethereum ETF (CETH)
21Shares US LLC, an affiliate of 21Shares AG, one of the major issuers of cryptocurrency exchange-traded funds, has launched the 21Shares Core Ethereum ETF (Cboe: CETH), which offers exposure to Ether for a fee of 0.21%.
How to Buy Spot Ethereum ETF
The process to buy Ethereum Spot ETF is as follows
- Choose a platform or broker and create an account: The first thing to do is choose a platform, a broker, or an exchange where you can trade or invest, then enter your personal information and sign up.
- Confirm payment information: You can fund your account via bank transfer, debit, or credit card.
- Select and research ETFs: Search the platform for the ETF ticker symbol. The platform should deliver the most recent and accessible information.
- Buy your ETF shares: Place a market or limit order for your desired quantity of shares. It is that simple.
The whole process could take as little as 15 minutes. You’ll need a mobile phone or computer, an internet connection, a passport or driver’s license, and some payment.
Conclusion
Spot ether ETFs, which started trading in July 2024, allow investors to obtain exposure to the ETH cryptocurrency market through a regulated and accessible fund.
These investments may draw a broader spectrum of investors to the bitcoin market by making ETFs more accessible, simple, and subject to regulatory scrutiny. Unlike futures-based ether ETFs, spot ETFs directly store ETH tokens and are less expensive.
Before you begin trading or investing in Ethereum ETF, ensure that you are well-informed and consider your financial circumstances.