Asset management firm Franklin Templeton is the latest entrant into the race for a spot Ethereum ETF, filing an application with the Securities and Exchange Commission (SEC) this week.
Franklin joins over a half dozen other issuers like BlackRock, Ark Invest, 21Shares, Grayscale, and others who have filed in recent months for an Ethereum ETF. Franklin itself launched a bitcoin ETF in January along with nine other firms after gaining SEC approval. However, its bitcoin ETF has seen just $70 million in inflows, far less than competitors like BlackRock’s blockbuster $3.5 billion bitcoin fund.
Now Franklin is aiming to leverage its brand recognition to attract investors to an Ethereum product. The Franklin Ethereum ETF filing states that authorized participants would deliver only cash to create shares and receive only cash when redeeming, intended to remove complexities for investors to gain exposure. The fund’s shares would trade on the Cboe BZX Exchange if approved.
The Franklin filing also indicates the fund could stake a portion of Ethereum holdings to generate staking rewards. Competitors like Ark Invest have similarly updated filings to include potential staking components as a way to produce extra yield. About 25% of outstanding ether is currently staked to help validate transactions on the network.
#Bitcoin topped $50K Monday amid accelerating ETF inflows. $ETH gained over 5% as Franklin Templeton joined the spot Ethereum ETF race.
— CoinDesk (@CoinDesk) February 12, 2024
So far, the SEC has delayed rendering any decisions on Ethereum ETF applications. Some experts believe chances are less than 50% for approval before May, while others see better odds of getting a green light by the end of Q2 2024. Much may depend on how bitcoin and Ethereum markets perform in the coming months.
The entire crypto industry is anxiously awaiting the fate of these ETF applications. Ether prices climbed 5.5% on Monday to nearly $2,647, reaching their highest levels since 2021 as enthusiasm builds. Bitcoin also rallied strongly, topping $50,000 for the first time in over two years.
Approval of a spot Ethereum ETF could rapidly accelerate mainstream institutional adoption of ether and other digital assets. As the second largest cryptocurrency with a market cap over $300 billion, an Ethereum ETF would offer big money managers an easier route to gain exposure compared to owning coins outright. But regulatory concerns around volatility, custody solutions, and crypto hacking incidents have kept the SEC cautious to date.
All eyes are on how regulators decide to handle these Ethereum ETF filings. With powerhouse brands like BlackRock and Ark Invest in the mix, the chances seem to have improved significantly. Yet questions remain on whether the SEC is ready to give its blessing in 2024. The clock is ticking as rivals like Canada and other jurisdictions seem more open to allowing spot ETF products. Industry leaders will be closely monitoring the decisions and fallout in the coming months.
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Author: Oliver Dale