In a recent interview, SEC Commissioner Hester Peirce reopened the discussion of adding storage features to Ethereum exchange-traded funds (ETFs) after their upcoming launch, possibly on July 23.
Initially, ETF issuers like VanEck and Fidelity sought approval to bet on the underlying Ethereum cryptocurrency. productsHowever, there is speculation that they removed this component as a requirement for SEC approval of these ETFs in May.
Reintroducing staking in Ethereum ETFs?
During the interviewCommissioner Peirce expressed her view that features such as storage, which have been omitted from approved Bitcoin ETFs, remain open to reconsideration.
While she acknowledged that other commissioners may not share her view, she emphasized that the features of the Ethereum ETF product may be revisited after it goes live. Peirce said:
I definitely think there’s something like caching, or any product feature — we’ve seen that with Bitcoin ETPs as well, right? There were product features that some people wanted to include that weren’t included — and they’re always open to reconsideration as far as I’m concerned.
During her remarks, Peirce also expressed her disappointment with the increasingly difficult nature of cryptocurrencies. Approval Processes ETF Applications for Bitcoin and Ethereum He stressed the importance of launching the product smoothly and without excitement:
We shouldn’t be trying to create drama around launching products like this. We should just let them out and see if people want to buy them or not, and that’s how it should go.
Potential Benefits of Trading ETFs
Participation includes token holders. Earn Rewards By securing their tokens and contributing to the security of the blockchain network. In the process of staking Ethereum, validators reserve increments of 32 ETH to activate validators responsible for storing data, processing transactions, and adding new blocks to the blockchain.
By design, the requirement for verifiers to secure and work with staked tokens discourages malicious behavior that could compromise the network, while the inclusion of staking increases the potential for return, allowing investors to be rewarded for participating in the network’s consensus mechanism.
Institutional InvestorsIndividual investors and asset managers who are accustomed to staking as a mechanism may be attracted to investing in these ETFs, leading to increased demand and inflows into the new Ethereum ETF market.
Despite the lack of staking features in the Ethereum ETF market, analysts expect strong demand for Ethereum ETFs in the first months of trading, with one exception.
Mixed expectations
For example, Fundstrat’s Sean Farrell expects net inflows of more than $5 billion in the first few months of trading. Similarly, JPMorgan strategists led by Nikolaos Panigirtzoglou estimate that future ether portfolios will attract “modest” net inflows of between $1 billion and $3 billion for the rest of the year.
Veitel Lund, Senior Research Analyst at K33 Research, a cryptocurrency research firm, pridect $4B net inflows into Ethereum ETFs in first five months and a major “supply-absorption shock” that could boost ETH price.
However, Bitcoinist Reported Analysts at global asset management firm Bernstein have expressed bearish sentiments on the prospects of new Ethereum ETFs, as they may see lower demand than spot Bitcoin ETFs due to the lack of storage features.
At the time of writing, the second-largest cryptocurrency in the market is trading at $3,395, down over 1.5% in the 24-hour timeframe, but up 9% in the past week.
Featured image by DALL-E, chart by TradingView.com