Everything You Need to Know About Ethereum ETFs

Did you know that you can invest in crypto through some of the world’s largest traditional stock exchanges, like the Nasdaq and the New York Stock Exchange?

That’s thanks to the still-recent arrival of Bitcoin and Ethereum exchange-traded funds (ETFs) — which have been a massive win for the crypto landscape. 

But what are Ethereum ETFs, and why should you care?

Let’s take a closer look.

What Is an ETF?

Put simply, an exchange-traded fund (ETF) is a pooled investment fund traded on traditional stock exchanges. They help investors gain access to a set of different assets, like stocks, commodities, and cryptocurrencies.

Through ETFs, investors can earn profit from the performance of specific assets without buying these assets directly.

While ETFs have long been tied to traditional assets, the approval of the first Bitcoin exchange-traded funds in the US took place in January of last year — resulting in a crypto bull run. 

While the approval of Ethereum ETFs had a less immediate impact, it still resulted in a short but vigorous spike in ETH prices.

What Are Ethereum ETFs?

Similar to traditional ETFs, Ethereum ETFs enable investors to benefit from Ethereum's price movements without ever actually having to buy crypto directly. 

Rather than use an exchange, this allows investors — especially from the world of traditional finance — to profit from Ethereum in a way that more closely mirrors buying traditional stocks. 

This means investors can profit from Ethereum's price performance without dealing with the complexities associated with buying and selling crypto. As a result, crypto ETFs can be a great way to lower the barrier for entry and bring more money into the crypto space.

Where Are Ethereum ETFs Legal?

Ethereum ETFs are currently legal in the following jurisdictions:

• Canada, which became the first country to approve direct custody of Ethereum ETFs in April 2021. Investors can trade CI Galaxy Ethereum ETF, Purpose Ether ETF, and other assets on traditional stock exchanges such as the Toronto Stock Exchange.
• Brazil, which followed Canada’s example in September 2021. A crypto investment company QR Capital became the first one to list Ethereum ETFs on a local stock exchange.
• Hong Kong, which approved both Bitcoin and Ethereum ETFs in April 2024, even as cryptocurrency trading remains banned in mainland China.

Finally, the US joined the party in May 2024, marking a milestone for the global crypto recognition of crypto.

The Types of Ethereum ETFs

Ethereum ETFs can be divided into two broad groups:

1. Spot Ethereum ETFs

Spot Ethereum ETFs directly hold Ethereum’s underlying asset (ETH). When investors buy spot Ethereum ETFs, the fund buys ETH and holds it for them.

The value of these ETFs then fluctuate in tandem with Ethereum prices. Thus, it can be a way for traders to profit from ETH price movements without having to figure out how to buy crypto.

2. Futures Ethereum ETFs

Futures Ethereum ETFs work differently.

Instead of holding ETH directly, these ETFs buy Ethereum futures. Futures are contracts that allow traders to agree in advance to buy or sell ETH at a specific price on a set future date.

Buying Ethereum vs. Buying ETFs

While Ethereum ETFs reflect the price of ETH, these two types of assets differ in several key aspects:

• Ownership: Ethereum holders directly own the digital assets. ETF investors, on the other hand, own ETH indirectly through ETF shares.
• Regulation: ETFs are strictly regulated worldwide, while Ethereum ownership often allows more freedom, depending on jurisdiction.
• Fees: Ethereum ETF holders pay a management fee to an exchange broker. Ethereum holders, on the other hand, only pay network fees for transferring assets across different wallets.
• Trading platforms: Ethereum ETFs are traded on traditional stock exchanges, while ETH is available on centralized and decentralized cryptocurrency exchanges.

Who Issues Ethereum ETFs?

Right now, several financial companies are actively involved in issuing Ethereum ETFs. The most popular of these include:

• VanEck: A US-based investment management company that focuses on ETFs. Its two key funds, EFUT and ETHV, invest in Ethereum futures and spot ether, respectively.
• Fidelity: One of the largest financial brokers globally, founded in 1946. Fidelity expanded its portfolio in 2024 by launching the Fidelity Ethereum Fund, focusing on spot Ethereum ETFs.
• 21shares: his company positions itself as the largest crypto exchange-traded product (ETP) issuer. Aside from ETFs with direct exposure to ethers, it also issues Ethereum Core Staking ETP enabling investors to earn ETH staking rewards.
• ETC Group: Acquired by Bitwise Asset Management in 2024, this issuer combines direct Ethereum exposure with staking rewards in its ETFs.

Additionally, financial giants like BlackRock and Grayscale have played crucial roles in advancing cryptocurrency ETFs, contributing to regulatory clarity and market acceptance.

Why Are Ethereum ETFs Important?

Ethereum ETFs represent a new step in recognizing the legitimacy of crypto, while providing investors in the TradFi sector with easier access to the crypto market.

In many ways, crypto ETFs bridge the gap between TradFi and DeFi. They contribute to the mainstream adoption of crypto, and help enhance the flow of money into the space by attracting institutional investors.

Importantly, Ethereum ETFs have only recently received formal approval in countries like the US. Even as recently as a few years ago, the idea of being able to invest in crypto through an exchange-traded fund seemed like a pipe dream.

Today, the existence of these ETFs proves that crypto has simply become too big for regulators and TradFi institutions to ignore.

FAQ

What Are the Benefits of Ethereum ETFs?

Ethereum ETFs make cryptocurrencies more accessible, allowing TradFi investors to diversify their portfolios, increasing the flow of money into crypto in the process.

How Do I Invest in Ethereum ETFs?

The process of buying Ethereum ETFs is straightforward, and closely mirrors buying other exchange-traded products like stocks. It involves opening an account with a broker, depositing your funds, and then buying the ETF of your choice.

What Is the Symbol for Ethereum ETFs?

Ticker symbols vary by issuer. For example, Grayscale Ethereum Trust ETF uses "ETHE," while VanEck Ethereum ETF is identified as "ETHV." Always double check the ticker symbol to make sure it matches the fund you wish to buy.

Are Ethereum ETFs legal?

Ethereum ETFs were formally approved by the US SEC in 2024. They are also legal in Canada, Brazil, and Hong Kong.