Like a movie with a plot twist, the crypto world was overjoyed when the SEC finally approved nine Spot ETH ETFs in July 2024. This was a bit of a surprise because the SEC has been investigating ETH for its possible status as an unregistered security. But the wait is finally over, and retail investors can now trade Spot ETH ETFs in the stock market, just like the Spot Bitcoin ETF, which was approved earlier this year.
What Are The Available Spot ETH ETFs?
You can buy and sell Ethereum (ETH) just like any other stock via any stock broker with access to the US market. You do not need to know how to self-custody your ETH token anymore!
Here are the available ETH ETFs:
| Name | Symbol | Fee | Notes |
|---|---|---|---|
| Grayscale Ethereum Mini Trust | ETH | 0.15% | Fee waived for the first six months of trading or the first $2 billion in fund assets, whichever comes first. |
| Franklin Ethereum Trust | EZET | 0.19% | Fee waived until 31 Jan 2025 or the first $10 billion in fund assets, whichever comes first. |
| VanEck Ethereum ETF | ETHV | 0.20% | Fee waived for the first twelve months of trading or the first $1.5 billion in fund assets, whichever comes first. |
| Bitwise Ethereum ETF | ETHW | 0.20% | Fee waived for the first six months of trading or the first $500 million in fund assets, whichever comes first. |
| 21Shares Core Ethereum ETF | CETH | 0.21% | Fee waived for the first six months of trading or the first $500 million in fund assets, whichever comes first. |
| iShares Ethereum Trust | ETHA | 0.25% | Fee reduced to 0.12% for the first twelve months of trading or the first $2.5 billion in fund assets, whichever comes first. |
| Fidelity Ethereum Fund | FETH | 0.25% | Fee waived until 31 Dec 2024. |
| Invesco Galaxy Ethereum ETF | QETH | 0.25% | |
| Grayscale Ethereum Trust | ETHE | 2.50% |
The table above shows that these ETH ETFs offer relatively competitive fees and are from some of the largest asset managers in the US.
If you plan to hold for the long term, you may want to look at those with lower fees. However, you also want to make sure the asset managers behind it are reputable and have been in the industry for longer to ensure longevity. Additionally, you may want to consider the total asset under management (AUM) to ensure the ETF is profitable enough for the manager.
If you plan to trade these ETFs, look for those with higher volume or liquidity. This will allow you to trade with a smaller transaction spread easily.
Staking Rewards?
But there is a catch: you will not get the ETH staking reward if you buy these ETFs, as they do not distribute the staking rewards to you.
When you self-custody your ETH, you can stake it by locking it with a validator and helping secure the Ethereum network. As a reward, you will get around ~2% p.a. reward (as of 31 Jul 2024).
Unlike Bitcoin, ETH does not have a maximum supply (in other words, there is a potentially infinite supply). The Ethereum network ‘prints’ these new ETH tokens to reward stakers. However, at the same time, this process inflates the total ETH supply. So, you may think of earning this staking reward as a hedge against the Ethereum network inflation.
If you buy these ETH ETFs, remember that you won’t get that ~2% p.a. reward and, therefore, already losing ~2% every year compared to those who self-custody and stake.
Remarks
Spot ETH ETFs offer an easy and low-cost way to invest in Ethereum (ETH). If you are not savvy enough to self-custody ETH, you can consider these ETFs to gain exposure to the ETH price.
Keep in mind that buying Ethereum via these ETFs will not give you the staking reward, which means your holding will be diluted over time, similar to inflation in our fiat monetary supply.
However, the convenience of the ETF may compensate for this drawback. Additionally, these ETFs allow more people to gain exposure to ETH, such as those with retirement accounts who may have previously been unable to invest in crypto.
So, will you be considering these ETH ETFs?
As a friendly reminder, cryptocurrencies are highly volatile and may not be suitable for retail investors. They should only be reserved for investors with the highest risk profile. Please exercise prudence when investing.
