Ether ETFs Launch Trading with BlackRock Funds and More

[OnEquity]

Ether ETFs formally began trading in the US on Tuesday, bringing the world’s second-largest cryptocurrency into the mainstream for many investors and professional advisers. The new funds come from traditional issuers such as BlackRock and Fidelity, as well as cryptocurrency-specific firms such as Grayscale, marking another development in the gradual introduction of digital assets into mainstream finance. Ether is the cryptocurrency originating from the Ethereum (ETH) blockchain. While Bitcoin is often presented as a type of digital gold, Ether is perceived more as a bet on the growth of blockchain and cryptocurrencies in general.

“Ethereum’s appeal lies in its decentralized nature and its potential to drive digital transformation in finance and other industries,” said Jay Jacobs, head of US active and thematic ETFs at BlackRock, in a statement.

ETF Growth and Potential​

Bitcoin ETFs have raised about $17bn in net inflows since their launch in January, according to FactSet, a historically successful start. Ether ETFs are estimated to be smaller than Bitcoin funds, both because of the relative size of the two markets and because Ether may not be as well known to many investors. “Ethereum is a bit more confusing and uncertain for both retail and institutional investors,” said Sam Callahan, senior analyst at Swan Bitcoin.

Pitfalls and Advantages​

Ether ETFs do not allow staking, a procedure that can provide added performance for native cryptocurrency investors. Many of the funds launched this week offer temporary fee waivers to attract clients. Once applied, management fees range from 0.15% to 2.50%. The cheapest and most expensive funds come from Grayscale, which is transforming its multibillion-dollar Ether private fund into two differently priced ETFs.