Europe and Canada Lead the Charge in Ethereum ETF Market

As U.S. authorities consider the approval of Ethereum-based Exchange-Traded Funds (ETFs) for spot trading, Europe and Canada are already ahead with a robust presence in the market for both spot and futures Ethereum (ETH) investment products. According to a study by Coingecko, Europe leads the charge in the global Ethereum ETF marketplace, commanding an 81.4% share. The region hosts 13 ETFs that are backed by Ethereum, divided between spot and futures investments, with a collective $4.6 billion in assets under management (AUM).

Canada marks its presence as a significant player in the Ethereum ETF sector, holding a 16.6% market share with $949 million in AUM. For numerous Canadian investors, ETFs serve as a primary entry point into the realm of cryptocurrency. Following the introduction of stringent regulations on cryptocurrency firms, notable exchanges such as Binance and Bitstamp withdrew from the Canadian market.

As of February 2, the worldwide AUM for Ethereum ETFs was valued at $5.7 billion, distributed among 27 ETFs encompassing both spot and futures-oriented funds. The European market for Ethereum ETFs has been active since 2017, initiated by Grayscale with its Ethereum trust (ETHE), although this particular fund was excluded from the Coingecko analysis due to its closed-end structure. Grayscale has been in discussions with the U.S. Securities and Exchange Commission (SEC) regarding the conversion of ETHE into a spot Ethereum ETF, with a decision postponed to May, as reported by crypto.news.

In the United States, the approval of spot Bitcoin (BTC) ETFs has not guaranteed a similar pathway for Ethereum-based products, according to SEC chair Gary Gensler. Gensler has maintained that most cryptocurrencies are considered securities and should be registered with the SEC. Nonetheless, the SEC’s defeat in a legal battle with Grayscale and the subsequent authorization of spot BTC ETFs on January 10 might improve the prospects for approval of spot ETH funds. A U.S. court ruled that the SEC’s refusal of spot cryptocurrency products, while permitting futures-based ETFs, was unjustifiably inconsistent.

SEC Commissioner Hester Peirce has indicated that the process for Ethereum ETF approvals would differ from that of Bitcoin, where judicial intervention was necessary to prompt a reevaluation by the regulatory body.

Meanwhile, the launch of several spot ETH ETFs has been postponed to the second quarter of 2024, with proposals from entities like Fidelity and Invesco Galaxy awaiting resolution.

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