American investment management firm VanEck thinks spot Ethereum exchange-traded funds (ETFs) could become bigger than similar Bitcoin products after the United States Securities and Exchange Commission (SEC) eventually approves them in the coming months.
In a recent interview, Pranav Kanade, portfolio manager of VanEck, one of the issuers of the spot Bitcoin ETFs launched in January, said Ethereum ETFs could attract more demand as they have a market size as big, if not bigger, than Bitcoin ETFs.
Ethereum ETFs Could Surpass Bitcoin ETFs
Kanade’s belief contrasts with some crypto community members, who think Ethereum ETFs will not make much sense as the products may not allow staking reward distribution. Recall that Ethereum transitioned into a Proof-of-Stake protocol in 2022. Ether (ETH) holders can earn diverse yields by staking their assets on the blockchain.
Market analysts believe crypto investors should buy and stake their own ETH rather than invest in the ETFs. However, Kanade insists otherwise.
“The world of investors who are looking for cash producing assets is massive and ETH obviously generates fees that goes to the token holders. Even if you don’t have an ETF that can offer staking as a part of it, it’s still a cash producing asset, so I think ETH could make more sense as an asset to more people than Bitcoin does,” he stated.
While the VanEck portfolio manager thinks Ethereum ETFs could surpass Bitcoin funds, he sees such a feat as a huge task, considering the inflows exceeding $11 billion that the spot Bitcoin ETFs have seen within two months of their launch.
Odds of SEC Ethereum ETF Approval at 50%
In addition to Kanade’s controversial belief that Ethereum ETFs will outpace Bitcoin funds, he placed the odds of the SEC approving the former at 50%, contrary to Bloomberg analysts’ 30% prediction.
Considering that the SEC was legally forced to approve the spot Bitcoin ETFs, courtesy of the Grayscale court ruling, it seems unlikely that the agency is eager to greenlight similar products for Ethereum.
Nevertheless, agency commissioner Hester Pierce, popularly known as Crypto Mom, believes the regulator would not need a lawsuit or court order to approve pending applications for Ethereum ETFs.
Meanwhile, VanEck recently reduced the management fee for its Bitcoin ETF, HODL, from 0.2% to 0% to lure more investors to the product. The current fee will stay until March 2025 or until HODL amasses $1.5 billion in assets under management.
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