June 13, 2024 at 09:19 GMTModified date: June 13, 2024 at 09:19 GMT
June 13, 2024 at 09:19 GMT

ProShares advances spot Ethereum ETF with new S-1 filing

Managing $70 billion in assets, ProShares has quickly become a significant contender in the race to launch spot Ether ETFs. 

ProShares advances spot Ethereum ETF with new S-1 filing

ProShares has submitted an updated S-1 registration statement for its spot Ethereum ETF, according to a filing, dated 11 June 2024. This document provided detailed roles for various participants involved in the ETF.

The Bank of New York Mellon (BNY Mellon) plays a crucial role, acting as the transfer agent responsible for processing purchase and redemption orders and maintaining ownership records.

Additionally, BNY Mellon will serve as the fund’s administrator and cash custodian. The filing outlined other key participants’ roles as well.

Coinbase Custody will hold the Ethereum ($ETH), and Coinbase Inc. will operate as the prime execution agency.

Delaware Trust Company will act as the trustee, and ProShare Capital Management will be the fund’s sponsor.

Coinbase Credit is designated as the trade credit lender, enabling ProShares to borrow Ethereum and cash for transactions that exceed its trading balance.

There is flexibility in these roles, including a two-year initial term for BNY Mellon’s administrator position with provisions for annual renewals.

ProShares also reserves the right to add or terminate custodians and agents as needed, while Coinbase has the option to resign from its role as a cash customer.

A spot Ether ETF contender

Managing $70 billion in assets, ProShares has quickly become a significant contender in the race to launch spot Ether ETFs. 

Its recent S-1 registration statement came a day after the US Securities and Exchange Commission (SEC) acknowledged ProShares’ 19b-4 application.

ProShares has launched 2x leveraged long and short ETFs providing exposure to Ether. On 7 June, the ProShares Ultra Ether ETF (ETHT) and ProShares UltraShort Ether ETF (ETHD) debuted on the New York Stock Exchange. 

ETHD became the first 2x short Ethereum ETF in the market, while ETHT followed the launch of Volatility Shares’ 2x Ether ETF (ETHU) on 4 June.

These developments highlighted ProShares’ continued efforts to expand its offerings in the cryptocurrency space, catering to diverse investor strategies with both leveraged and spot ETF options.

An ETF analyst at Bloomberg, James Seyffart, noted, “SEC just added the ProShares’ Ethereum ETF Filing to its website. That is extremely quick. Instinct initially says this won’t launch on day one with the other ETFs whenever that is but who knows. This is interesting”. 

The co-founder of the ETF Institute, Nate Geraci, tweeted, “Looks like ProShares entering spot ETH ETF race. Was always surprised they didn’t launch spot BTC ETF”.

This move followed the SEC’s approval of 19b-4 filings from eight prospective spot Ethereum ETF issuers on 23 May.

They were from major financial institutions, including VanEck, BlackRock, and Fidelity and marked a significant shift from the SEC’s previously hostile stance towards such applications. 

The decision came as a surprise to the crypto community, considering the SEC’s prolonged hesitancy towards the industry.

Once these funds are live, they would allow traditional financial institutions and investors to access the altcoin without holding cryptocurrencies directly.

While this approval is a milestone, trading is not expected to commence immediately. In a tweet posted on the same day, Bloomberg analyst, Eric Balchunas, noted that trading could likely be weeks away. 

A July launch

Recently, BlackRock also updated its S-1 filing with the SEC, moving closer to launching a spot Ethereum ETF. 

The updated document stated that the Trust will not engage in staking activities, aligning with strategies by other asset managers like VanEck to meet SEC requirements and speed up the launch.

This update raised hopes for a July launch of spot Ethereum ETFs, driven by BlackRock’s progress in meeting regulatory requirements. 

While the start of trading depends on SEC approval of S-1 forms, industry experts are cautiously optimistic, with expectations ranging from late June to early July.

If approved, these ETFs would provide a regulated way for investors to access Ethereum, bridging the gap between traditional finance and the crypto market.

It would also lower the barrier for institutional and retail investors, increasing interest and investment in the Ethereum ecosystem. 

The SEC has also indicated that the approval of the S-1 registration statements would take place in the coming months, paving the way for Ether ETFs to begin trading.