Ethereum ETFs have just debuted on the world's largest stock market, the United States.

This milestone carries a number of implications for the cryptocurrency market globally. That is why, below are the top 5 things that investors should know about these instruments , regardless of whether they intend to access them or not.

1) Nine Ethereum ETFs have entered the market

Two months after the approval of ether ETFs in the United States, the nine products of this type proposed before the Securities and Exchange Commission (SEC) were finally launched on July 23.

These are Grayscale Ethereum Trust (ETHE), Grayscale Ethereum Mini Trust (ETH), Franklin Ethereum (EZET), VanEck Ethereum (ETHV), Bitwise Ethereum (ETHW), 21Shares Core Ethereum (CETH), Fildelity Ethereum Fund (FETH), iShares Ethereum Trust (ETHA), and Invesco Galaxy Ethereum (QETH).

Together, they started trading with almost $10.3 billion in assets under management. Nearly 90% of this is held by ETHE, which previously operated as an off-exchange investment fund. This can be seen in the following image shared by market expert James Seyffart.

Ethereum ETF assets under management at time of listing. Source: James Seyffart.

The companies issuing ether ETFs are the same ones that launched bitcoin (BTC) ETFs in the US market at the beginning of 2024. The only difference is that three of those that own a BTC ETF have not launched an ETH ETF, which are WisdomTree, Valkyrie and Hashdex.

2) Coinbase is the main custodian of the ETH of these ETFs

Both the ether and bitcoin ETFs launched this year in the United States are spot, meaning they invest directly in such cryptoassets. To this end, most issuers of such funds have appointed the company Coinbase as the custodian of their holdings.

Coinbase is responsible for the custody of seven of the nine ether ETFs and eight of the eleven bitcoin ETFs on the US market. These are those issued by companies such as Grayscale, Franklin Templeton, Bitwise, 21Shares, BlackRock, and Invesco.

The only two ether ETF issuers that have not named Coinbase as their custodian are VanEck, which set up Gemini for this task, and Fidelity, which will do so itself. 

VanEck and Fidelity also have the same choice of custodian for their Bitcoin ETFs, while Hashdex, an asset manager that has not launched an Ether ETF, has chosen Bitgo for the task. This can be seen below.

Custodians play a key role for ETFs, as they are responsible for storing and caring for the holdings they accumulate. In this case, they are the ones who will safeguard the ETH they buy when they receive capital inflows from investors.

List of bitcoin ETFs in the US market with their respective custodians. Source: Bloomberg.

3) Ethereum ETFs already existed in other countries

Although all eyes are now focused on the debut of Ethereum ETFs in the United States due to the magnitude of its market, it is worth noting that this type of product was already available to investors in other parts of the world.

In Hong Kong, seven ETH spot ETFs were launched three months ago during April 2024, ahead of their approval in the world's largest economy. Since then, they have garnered nearly $45 million, according to data from cryptocurrency explorer Sosovalue.

Meanwhile, such instruments have been in operation in many parts of the world for years. They have been in operation in Switzerland since 2019, and in Canada, Germany, the European principality of Liechtenstein and the British island of Jersey since 2021.

At the moment, the spot ether ETF with the most assets under management is the Canadian CI Galaxy Ethereum ETF (ETHX.B) with almost USD 600 million under management, according to the explorer ETFmarket. Although this could be about to change if those launched in the United States raise more capital, as happened with those of bitcoin that surpassed those in other countries.

4) The arrival of these instruments provides greater regulatory clarity

The arrival of ether and bitcoin ETFs to the US market comes after having been rejected for years by the SEC. In this sense, the green light that the agency finally gave this year

The approval of ether ETFs in the United States, months after those of bitcoin, comes after having been rejected for years by the SEC. In this sense, the green light that the agency finally gave this year marks a radical change in regulation for the market.

In fact, the authorization of the launches reflects that, for the SEC, bitcoin and ether are definitely not a security , but a commodity like gold and oil. Thus, this event may motivate demand for these products among those seeking greater transparency regarding the classification of these assets.

The fact also gives rise to the eventual authorization of ETFs for other cryptoassets in the economic powerhouse. Currently, there are applications before the SEC to launch this type of instruments based on the solana (SOL) cryptocurrency, for which the agency should decide whether to approve them before March 2025.

5) There are varying expectations about how much money these funds will raise

The regulatory authorization of Ethereum ETFs in the world's main exchange may be the signal that some have been waiting for to get into ETH. In addition, it means a gateway for those traditional and institutional investors who do not want to buy the asset directly, or keep it in a self-custody wallet .

This is why this event has implications for the price of the cryptocurrency. “Like the Bitcoin ETF approved in January of this year, this new fund is expected to drive a steady inflow of institutional capital into the Ethereum market,” said Ramiro García, an analyst at the crypto-asset exchange, Bitget.

García argues that, due to this, “the approved ETF on Ethereum promises to be a significant milestone in the cryptocurrency market.” However, he believes that its demand will occur gradually.

According to projections by Citi, the financial institution that owns CitiBank, Ethereum ETFs will capture between 30% and 35% of the capital that Bitcoin ETFs have already captured. This is equivalent to around USD 5 billion in the first six months.

Other players have lower expectations than Citi, with analyst Seyffart projecting that they will attract 20% of bitcoin ETFs. However, regardless of how much money they raise, the capital inflows they receive will push the price up.

That's why, with the emergence of Ethereum ETFs, specialists such as Matt Hougan, Bitwise's chief investment officer, expect that, although the price of ETH will have choppy action at the beginning, it will reach new highs towards the end of 2024.