The first spot Ethereum ETFs began trading in July 2024, offering investors a new way to gain exposure to the world’s second-largest cryptocurrency. While these products provide access—especially for retirement account holders—initial market reactions have been muted, and investors should note that ETF shares do not earn staking rewards.
What is a Spot Ethereum ETF?
A spot Ethereum ETF is a type of exchange-traded fund that holds Ethereum directly. Ethereum is the second-largest cryptocurrency by market capitalization and differs from Bitcoin in several key ways.
Its blockchain supports not only Ether but also decentralized applications and non-fungible tokens (NFTs). Moreover, Ethereum now uses a Proof-of-Stake consensus mechanism—a more energy-efficient system compared to Bitcoin’s Proof-of-Work model. This transition took place in 2022.
Before spot Ethereum ETFs were approved, investors could access Ethereum strategy ETFs, which used futures contracts to track the price of Ether. These funds, however, often come with higher fees and may not track the cryptocurrency’s price as accurately.
The July 2024 approvals marked the first time spot Ethereum ETFs became available to investors.
Currently Available Spot Ethereum ETFs
As of their launch, eight spot Ethereum ETFs have entered the market. Below is a summary of their key details:
- iShares Ethereum Trust (ETHA): Expense ratio of 0.25%, with a fee waiver for the first six months.
- Fidelity Ethereum Fund (FETH): Charges 0.25% with an introductory waiver.
- Grayscale Ethereum Mini Trust (ETH): Comes with a 0.25% fee after conversion.
- ARK 21Shares Ethereum ETF (ARKZ): Fees set at 0.21%.
- Bitwise Ethereum ETF (BITI): Expense ratio of 0.20%.
- VanEck Ethereum Trust (ETHV): Fees total 0.20%.
- Franklin Ethereum ETF (EZET): Also at 0.19%.
- Invesco Galaxy Ethereum ETF (QETH): Lowest ongoing fee at 0.17%.
Please note that fees and promotions are subject to change as issuers compete for market share.
Grayscale Ethereum Trust: Not Your Typical ETF
There is a ninth fund tracking spot Ethereum—the Grayscale Ethereum Trust (ETHE)—but it is structured as an exchange-traded product (ETP), not a traditional ETF.
This means ETHE can trade at a premium or discount to its net asset value, potentially introducing additional risk for investors. It is the largest Ethereum fund by assets, representing over 2% of the total Ether market. Its fee is 2.50%, with no promotional waiver available.
The Ethereum ETF Fee War
In the days leading up to the July 2024 approvals, ETF providers engaged in aggressive fee competition. Multiple amended filings were submitted as issuers undercut each other’s proposed expense ratios.
Some firms even introduced temporary promotions, such as complete fee waivers for the first six months. This rapid evolution in pricing means that fee information can become outdated quickly. Always verify the latest details directly with the fund provider before investing.
👉 Compare the latest Ethereum ETF fees and offers
Ethereum Strategy ETFs: The Futures-Based Approach
Ethereum strategy ETFs are defined as funds that invest at least 50% of their assets in Ethereum futures contracts. Seven such ETFs are currently available, with fees generally higher than those of the new spot ETFs.
These products may be useful in certain regulatory contexts but often come with increased complexity and cost.
What ETF Approval Means for Ethereum
Year-to-date, Ether’s price has increased by over 40%. The long-term impact of ETF approval on its price, however, remains uncertain.
These new funds provide retirement account investors—such as those with 401(k)s and IRAs—access to Ethereum through a familiar structure. With nearly $40 trillion held in U.S. retirement accounts, this represents a significant potential market.
That said, the short-term market reaction has been subdued. On the first day of trading, the price of Ether saw a slight decrease.
Ethereum ETF vs. Direct Ethereum Ownership
Spot Ethereum ETFs offer distinct advantages for certain investors. They provide a regulated, accessible vehicle for gaining crypto exposure, particularly within retirement accounts.
However, there are also drawbacks. Most significantly, ETF investors do not receive staking rewards—a form of passive income available to those who hold Ether directly. If earning yield is a priority, you may need to 👉 explore more strategies involving direct ownership.
Frequently Asked Questions
What is staking and why don’t ETF holders receive rewards?
Staking involves actively participating in transaction validation on a proof-of-stake blockchain. Rewards are distributed to those who stake their coins directly. ETFs hold the asset on behalf of investors but do not pass through staking income.
Can I buy Ethereum ETFs in my IRA?
Yes, most of the newly approved spot Ethereum ETFs are available for purchase in traditional and Roth IRAs, depending on your brokerage’s offering.
How do spot ETFs differ from futures-based Ethereum ETFs?
Spot ETFs hold actual Ether, while futures-based ETFs hold contracts deriving their value from future Ether prices. The latter may experience tracking error and higher fees.
Are Ethereum ETFs safer than holding crypto directly?
ETFs are held with a custodial broker and may offer better security for some investors compared to self-custody of digital assets, which requires managing private keys.
Will more Ethereum ETFs be launched?
It is possible. The competitive landscape is still evolving, and new entrants may appear if investor demand remains strong.
Do these ETFs hold any other cryptocurrencies?
No. The spot Ethereum ETFs approved in July 2024 hold only Ether, in keeping with their regulatory approval.