A Guide to Ethereum ETFs

The first exchange-traded funds (ETFs) that track the spot price of Ethereum were launched on July 23, 2024. The launch occurred after the United States Securities and Exchange Commission (SEC), which regulates US securities markets, greenlighted the funds. This moneyland.ch guide explains what Ethereum spot ETFs are, and provides information about the new funds.

What is an Ethereum ETF?

The newly-approved Ethereum ETFs are funds that invest in the Ether cryptocurrency. By investing in these funds, you can participate in Ethereum price developments without having to buy actual Ethereum. These ETFs aim to replicate the spot price of Ether, which is why they are called Ethereum spot ETFs.

In the past, the only similar products available to investors were exchange-traded products (ETPs) that tracked the Ethereum price. The advantage of using ETFs instead of ETPs is that your investment is better protected if the fund manager becomes insolvent because fund capital is segregated. ETPs, on the other hand, are simply debt claims against the company that issues them.

What are the advantages of the new ETFs?

The approval and launching of the new Ethereum ETFs is significant because it could potentially send a signal that cryptocurrencies are slowly becoming mainstream. Up until now, the cryptocurrency market has had a shaky reputation. Investors who already hold Ethereum could benefit if the ETFs attract new investors who would not otherwise buy Ethereum. The resulting demand could push the price of Ethereum up. For example, the ETFs may attract capital from institutional investors. However, there is no guarantee that the price of Ethereum will climb.

What are the risks?

The risks lie in the underlying asset – Ethereum itself. Like other cryptocurrencies, Ethereum is a highly speculative investment that is not backed by any tangible assets. The price of Ethereum changes unpredictably. Major losses can occur at any time. On the other hand, it is hypothetically possible for Ethereum to gain a lot of value in a very short period of time.

Which Ethereum spot ETFs are there?

Investors can choose between nine different Ethereum spot ETFs (as per July 2024). The ongoing fees you pay to use an ETF are shown as the total expense ratio (TER).

Table 1: Overview of Ethereum spot ETFs

Source: Fund managers. Date: July 23, 2024. ETFs are sorted by TER.

Some fund managers offer introductory TER discounts or waivers that apply for a limited amount of time. Table 1 does not account for these special promotional offers.

How can I invest in Ethereum ETFs?

ETFs are traded on stock exchanges just like the stocks of companies. You can buy and sell shares in ETFs using a stock brokerage account. The interactive stock brokerage account comparison on moneyland.ch makes it easy to find the right platform.  

Which Swiss banks are the cheapest?

The cost of investing in Ethereum spot ETFs depends on both the TER charged by the ETF itself, and the fees charged by your bank to buy, hold, and sell ETF shares. Brokerage fees and custody fees vary hugely between Swiss banks. Swiss stamp taxes are the only cost that remains the same no matter which Swiss bank you use.

Table 2: The cheapest Swiss banks for buying and selling 1000 US dollars of shares in Ethereum ETFs

The comparison is based on a USD 1000 investment in an Ethereum spot ETF and a total balance of USD 10,000 worth of securities in the stock brokerage account. Date: July 23, 2024.

Note: This article is published for informational purposes only, and should not be considered investment advice. moneyland.ch does not accept any liability in connection with this article.

More on this topic:
How to invest in Ethereum
A guide to bitcoin ETFs
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