According to that filing, nearly all of the fund’s assets will be invested in exchange-traded Ethereum futures, while a small portion will be invested in collateral investments such as cash, cash-like instruments, or high-quality securities. The text of the filing emphasizes that the fund’s assets will not be invested in Ethereum (ETH) itself.
Valkyrie’s filing indicates that the fund’s investment capacity may be limited by regulations set by the Chicago Mercantile Exchange (CME). Those limits currently restrict ETH futures positions to 8,000 contracts per month. Each contract represents 50 ETH (currently $91,100). Valkyrie said the fund may invest in longer-dated futures contracts and additional collateral investments if it reaches these limits.
Valkyrie previously tried to combine its Bitcoin futures ETF (called the “Bitcoin Strategy ETF”) with Ethereum futures in an Aug. 4 filing. That filing would see Valkyrie integrate both investments and rename the fund accordingly starting on Oct. 3 if approved.
The status of that filing, and its connection to the recent filing, have not been clarified in the document.
Interest in crypto ETFs is high
Ethereum futures ETFs attracted widespread interest from asset managers this summer. Volatility Shares, Bitwise, ProShares, VanEck, Roundhill, and Grayscale have all applied to offer an Ethereum futures ETF in recent weeks.
That interest comes alongside broader interest in cryptocurrency ETFs, as Valkyrie and many other companies are also pursuing a spot Bitcoin ETF. Valkyrie submitted its application to the SEC on June 21 after the asset management giant BlackRock did the same just days earlier. As of the current date, no U.S. company has been granted permission to offer a spot Bitcoin ETF, reportedly due to inadequate surveillance-sharing agreements
Valkyrie was also one of the first companies to offer a Bitcoin futures ETF in October 2021. It offers various other crypto-related investments as well.