Ether ETFs Could Be Bigger Than Bitcoin ETFs, Says VanEck

With
the
deadline
for
a
decision
on
the
approval
of
a
spot
ether
ETF
by
the
U.S.
Securities
and
Exchange
Commission
(SEC)
approaching,
industry
experts
are
weighing
the
potential
uptake
of
such
a
fund.

Some
say
investing
in
an
ether
ETF
wouldn’t
make
sense
as
such
funds
won’t
likely
allow
staking
reward
distribution.
Investors,
they
argue,
would
thus
be
better
off
buying
and
staking
their
own
ether

(ETH).

But
VanEck,
the
global
investment
firm
whose
Bitcoin
Trust
(HODL)
is
among
the
10
spot
bitcoin
ETFs
that
became
available
earlier
this
year,
thinks
an
ether
ETF
could
attract
huge
demand.

“From
a
market
perspective,
part
of
me
believes
that
the
market
size
for
a
spot
ETH
ETF
is
potentially
as
big
if
not
bigger
than
the
spot
bitcoin
ETFs,”
said
VanEck
Portfolio
Manager
Pranav
Kanade.

That
would
be
a
tall
task
given
the
more
than
$10
billion
of
net
inflows
into
the
spot
BTC
products
in
only
about
two
months
of
availability.

“The
world
of
investors
who
are
looking
for
cash
producing
assets
is
massive
and
ETH
obviously
generates
fees
that
goes
to
the
token
holders,”
explained
Kanade.
“Even
if
you
don’t
have
an
ETF
that
can
offer
staking
as
a
part
of
it,
it’s
still
a
cash
producing
asset,
so
I
think
ETH
could
make
more
sense
as
an
asset
to
more
people
than
Bitcoin
does.”

As
the
Ethereum
uses
a
Proof
of
Stake
consensus
mechanism,
holders
of
ether
can
earn
yield
by
“staking”
or
putting
their
tokens
to
work
on
the
blockchain.
On
Coinbase,
for
instance,
ETH
stakers
can
earn
about
a
3%
yield.

Still,
the
odds
of
SEC
approval
of
spot
ETH
products
are
far
from
assured.
Analysts
at
Bloomberg
recently
lowered
the
chances
of
a
regulatory
green
light
–
even
without
the
staking
aspect
–
to
just
30%
For
his
part,
Kanade
places
the
odds
at
more
like
50%.

VanEck,
which
has
over
68
ETFs
under
its
umbrella,
earlier
this
week
temporarily
cut
the
management
fee
on
its
Bitcoin
Trust
from
0.2%
to
0%.
The
0%
remains
in
place
until
March
2025
or
the
fund
gets
up
to
$1.5
billion
in
AUM..

“Initially
we
were
one
of
the
few
that
did
not
do
a
short
term
waiver,
we
came
out
very
aggressively
at
a
low
fee
right
from
the
start
and
I
had
always
thought
that
that
was
the
right
level
to
be
at
but
I
think
our
thinking
was
that
historically
with
ETF
launches,
the
short
term
waivers
have
not
gone
over
that
well
and
frankly,
they
can
be
a
little
confusing,
and
maybe
have
a
lack
of
transparency
as
to
how
they
work,”
said
Kyle
DaCruz,
director
of
digital
assets
products
at
VanEck.

“But
we
listened
to
our
investors
and
it’s
clear
that
that
was
important
to
investors
in
the
market
so
we
shifted,”
he
continued.
“Relative,
we’d
like
to
do
better
and
part
of
that
initiative
is
that
fee
waiver.”

The
move
so
far
is
an
apparent
success.
In
the
roughly
two
months
from
launch
until
the
fee
trimming
this
week,
HODL
had
attracted
about
4,300
bitcoin
and
just
shy
of
$300
million
in
AUM.
In
the
handful
of
days
since,
the
fund
has
ballooned
to
more
than
7,200
bitcoin
and
$527
million
in
AUM.

That
level
places
HOLD
fifth
in
AUM
among
the
nine
new
spot
bitcoin
ETFs
(excepting
Grayscale’s
GBTC),
behind
BlackRock,
Fidelity,
ARK/21Shares
and
Bitwise,
and
ahead
of
Invesco/Galaxy,
Franklin
Templeton,
Valkyrie
and
WisdomTree.

Currently,
only
about
1%
of
the
firm’s
AUM
is
in
crypto,
but
VanEck
CEO
Jan
Van
Eck
would
like
that
number
to
be
much
larger,
according
to
Kanade.

“Jan’s
aspiration
is
to
have
crypto
be
15%
of
the
AUM
base
one
day
in
the
future,”
he
said.
“Sooner
rather
than
later.”