16 Ethereum ETFs and Their Fees, Promotions, and Holdings

Author: Sam Taube; Compiler: Vernacular Blockchain

About six months ago, the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETF. On July 23, 2024, the SEC approved the first spot Ethereum ETF to start trading.

1. What is a spot Ethereum ETF?

A spot Ethereum ETF is a trading platform-traded fund that directly invests in Ethereum, the world's second largest cryptocurrency by market value after Bitcoin.

Ethereum has many characteristics that distinguish it from Bitcoin. Its blockchain not only carries Ether, but also hosts decentralized applications and non-fungible tokens (NFTs) running on the Ethereum protocol. In addition, Ethereum now uses a Proof of Stake system to generate new coins, which is a more energy-efficient mechanism than the Proof of Work used in Bitcoin mining. (Ethereum also used a proof-of-work system until 2022, before switching to proof-of-stake.)

Before the spot ETF was approved, there were already Ethereum strategy ETFs on the market, which indirectly tracked the price of Ether through futures contracts. However, such ETFs may not track the price of cryptocurrencies as accurately as spot Ethereum ETFs and may charge higher fees. The spot Ethereum ETF approved in July 2024 is the first of its kind.

2. Spot Ethereum ETF

So far, eight different spot Ethereum ETFs have begun trading. Below are the names of each ETF and their trading codes, fees, and details of any promotional fee waivers.

3. No. 9 Ethereum Fund

Technically, there are currently nine investment funds on the market that track the spot price of Ethereum, but the ninth is not a traditional ETF. Grayscale Ethereum Trust (ETHE), not to be confused with its Mini Trust ETF, is an exchange-traded product (ETP) whose market price may deviate from its net asset value and may provide investors with a premium or discount on their ether holdings.

ETHE is the world's largest Ethereum spot fund, accounting for more than 2% of Ethereum's total market value at the time of writing. Its expense ratio is 2.50%, and there are currently no fee reduction promotions. It was also approved for trading on the exchange on July 23.

4. Ethereum ETF Price War

In the days leading up to the Ethereum ETF's approval in July 2024, issuers launched a fee war. Many companies submitted multiple amended registration statements, reducing fees in an attempt to undercut their competitors. Some companies followed suit and submitted their own revised versions within a few days, with even lower fees.

Some companies also launched last-minute promotions, such as announcing that fees would be waived for the first six months, to show that they were the cheapest Ethereum ETF on the market. This trend of rapid fee reductions and promotions continued until a few days before the SEC announced its approval, and it is likely to continue in the future.

Given this, any information you see about Ethereum ETF fees and promotions is worth double-checking. Any numbers online may be out of date by the time you read them.

5. Ethereum Strategy ETF

We define Ethereum Strategy ETF as any ETF that invests at least 50% of its assets in Ethereum futures. There are currently seven such funds on the market, and their fees are listed below in order from low to high.

6. What does the approval of the ETF mean for Ethereum?

As of writing, the price of Ethereum has risen by more than 40% this year. Will the recent ETF approval further boost this rally? This remains to be seen.

The Ethereum ETF offers 401(k) and IRA investors a new way to invest in cryptocurrencies. Americans collectively hold nearly $40 trillion in retirement accounts, and many of these retirement accounts do not allow direct trading of cryptocurrencies. (Note: 401(k) and IRA are common retirement savings accounts in the United States. They generally do not allow direct purchases of cryptocurrencies, and the Ethereum ETF offers investors in these accounts a way to indirectly invest in cryptocurrencies.)

However, the market's short-term reaction to the approval of the Ethereum ETF has been relatively muted so far. On July 23 - the ETF's first day of trading - from 9:30 a.m. to 4:00 p.m. ET, the price of Ethereum actually fell slightly.

7. Ethereum ETF vs. Ethereum Itself

The spot Ethereum ETF may have some advantages over other ways to invest in Ethereum. As mentioned earlier, for investors who are unable to purchase Ethereum directly (such as retirement account investors), spot Ethereum ETFs may provide a cheaper and more reliable way to invest than previous Ethereum strategy ETFs.

However, it is worth noting that Ethereum ETFs also have some disadvantages compared to directly holding cryptocurrencies. Current Ethereum ETF investors will not receive staking rewards (i.e., a kind of interest or dividend reward for those who hold Ether).

If you want to gain this feature of Ethereum, you need to invest directly in the cryptocurrency itself.