In a filing made on Friday, Invesco, a fund group that manages nearly $1.6 trillion in assets, advanced into the crypto domain. Recently, the Invesco Galaxy Ethereum ETF’s purpose was made public. Galaxy Digital Funds will function as the execution agent and manage the sale of ether in this strategic move. Notably, this ETF will hold ether directly, setting it apart from several ether futures ETFs due to debut in the near future.
Invesco Galaxy joins the ETH ETF race
Invesco and Mike Novogratz’s Galaxy Digital have submitted an application for an Ethereum (ETH) spot exchange-traded fund (ETF) following their June application for a similar Bitcoin (BTC) product.
According to the company’s S-1 registration statement, the Invesco Galaxy Ethereum ETF will “reflect the performance of the spot price of ether” by storing units of the crypto with an unnamed custodian. While Invesco is the Trust’s sponsor, Galaxy Digital is its “execution agent,” which will sell ETH to cover the Trust’s expenses.
This is the fourth Ethereum spot ETF application to arrive at the SEC in recent weeks, following similar filings from Ark Invest/21Shares, VanEck, and Hashdex.
The timing of these proposals is crucially important. Grayscale Investments recently celebrated a landmark court victory against the SEC. This decision, which was praised by several crypto enthusiasts, may have accelerated the development of spot ether ETFs.
In addition, Invesco has been active in the digital asset market for some time. Their partnership with Galaxy Digital began in September 2021 and intended to create crypto ETFs backed by physical assets. The alliance pledged to incorporate institutional-grade crypto management with global ETF expertise, potentially ushering in a new era for the crypto industry
The industry has maintained that a spot ETF is the next logical step for crypto investments in the United States, given that the launch of an Ethereum futures product next week is almost certain.
VanEck and Valkyrie were already authorized this week, but Bloomberg ETF analyst James Seyffart noted that Bitwise, ProShares, Hashdex, and Volatility Shares could join them on October 2nd.
Initially, Valkyrie announced that the trading of its Ethereum ETF would commence on Friday. However, the company fell into issues with the SEC when it purchased Ether futures contracts before announcing the news. Since then, it has agreed to unwind its present position in ETH futures and will not repurchase contracts until the fund goes live the following week.
Regulatory hurdles for ETFs approval in the United States
While regulators have approved futures ETFs, spot crypto ETFs remain unavailable to U.S. investors. Since their June application, the Securities and Exchange Commission (SEC) has twice delayed Invesco and Galaxy’s Bitcoin spot ETF application, along with rivals BlackRock, Bitwise, and Valkyrie.
Interestingly, while several countries have embraced spot crypto ETFs, the SEC remains cautious, delaying decisions such as the Ark 21Shares Bitcoin ETF.
The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.
SEC
As a result, as the crypto landscape evolves, various fund organizations are racing to introduce a variety of crypto products. Ark Invest’s ambitious aim is to lead the US crypto ETF market with a comprehensive offerings suite, potentially revolutionizing how traditional financial users access digital assets.
The next few months are expected to be crucial for the US crypto ETF market, with several major competitors contending for the lead. The regulatory bodies’ decisions and the market’s evolution will undoubtedly influence the future of crypto investments.
Despite its court loss, Bitwise on Monday amended its Bitcoin ETF application to account for future SEC rejections of similar products.
Ether is trading in the green at the time of writing at $1,667, driven by euphoria over the debut of futures ETFs. According to Binance, Ethereum has a current market cap of $200.78. The 24-hour trading volume stands at $5.48B. Ethereum is +0.95% in the last 24 hours with a circulating supply of 120.24M.
