May 29, 2024 - Economy

๐Ÿ‘‘ Who's on first in the ether ETF race

Illustration of the Ethereum logo running through finish line tape.

Illustration: Lindsey Bailey/Axios

VanEck would be the first to launch a spot ether exchange-traded fund if the SEC stopped treating crypto ETF launches like special events, handling them like any other.

Catch up quick: Pressure's on. Ether ETFs received listing approval Thursday. Meanwhile, would-be issuers are moving into the second half of the regulatory process, with nine shops getting ready to launch.

Why it matters: In ETF-land, the first-mover advantage is real. But that hasn't always applied to folks gunning for that superlative in digital assets โ€” and for shops like VanEck, a traditional finance (TradFi) asset manager that was early to embrace digital assets, it appears unfair.

Zoom in: Matthew Sigel, VanEck's head of digital assets, tells Axios that's the kind of thing that kills investor choice and will bring about a "bland dystopia where every product is the same, and BlackRock has the most."

  • "That it's the second time, and these products, substantially the same, and we happen to be first, again, it just seems a particular insult to not get it," Sigel said.
  • Although he's salty, he tries to be understanding about "why we got screwed for Bitcoin."

Between the lines: Launching a crypto ETF should be more standard now.

  • ๐Ÿ‘†Sigel's argument for why VanEck should be first is that is what is expected out of normal SEC procedure.

Flashback: VanEck applied for a bitcoin ETF as early as 2018, when the only other serious contender was Grayscale.

  • And, despite the VanEck Bitcoin Trust's nifty, consumer-friendly ticker HODL, it ranks sixth of the 10 spot bitcoin ETFs.

Behind the scenes: The idea behind socializing spot bitcoin ETF launches was that the SEC did not want to play kingmaker. Yet in hindsight, making the BlackRocks and Fidelitys of the world debut alongside boutiques like Bitwise, Grayscale and VanEck was hardly an equalizing move.

  • See: Charted ๐Ÿ‘‡.

What we're watching: Sigel said the approval document last week contains "vague marching orders" that say lining up launches "may be proper" for spot ether ETFs.

  • But he's optimistic the SEC unit responsible for making that decision will "do the right thing" and take applications first come, first served.

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