CoinShares Rolls Out a Physically-Backed ETH Exchange-Traded Product

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In Brief
  • CoinShares is launching a physically-backed Exchange-Traded Product (ETP) called ETHE.

  • This is its second ETP after the launch of its Bitcoin product BITC.

  • The move follows the growing demand in Ethereum (ETH) from institutional investors.

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On Feb. 24, CoinShares, Europe’s largest digital asset investment house, launched a physically-backed Exchange-Traded Product (ETP): CoinShares Physical Ethereum (ETHE).

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The new ETP will provide institutions with passive exposure to Ethereum (ETH). According to the firm’s press release, ETHE will be available with roughly $75 million in assets under management (AUM). 

Initially, each unit of physical Ethereum will be backed with 0.03 ether. Investors can trade ETHE on the regulated SIX Swiss Exchange with a base fee of 1.25%. This is 0.75% lower than the industry standard, which could be an appealing ETH institutional investment vehicle.

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Moving to the Forefront of Crypto Investment

The firm also notes that investors can now easily access ETHE. Its AUM indicator at launch “surpasses the baseline requirements for institutional and corporate investment consideration.”

Townsend Lansing, head of product at CoinShares commented on the release: 

“Bringing innovative products like ETHE allows us to continue setting the industry standard for trust and transparency and provide institutions with easy access to industry leading crypto investment vehicles.”

This is the firm’s second similar product after the Bitcoin (BTC) ETP (BITC), which CoinShares listed on SIX on Jan. 19. Thus, the company has become the 35th ETP provider on the exchange immediately following the ETC Group.

Both Bitcoin and Ether ETPs will be custodied by Komainu. The service is a hybrid custodian for digital assets created by CoinShares, investment bank Nomura, and leading security firm Ledger.

Will ETH Stay Strong?

CoinShare’s chief revenue officer Frank Spiteri highlighted that the ETHE launch is a result of last year’s continuing “demand in digital assets from institutions.” He added:

“We have also seen an increase in investor interest in ethereum. We are encouraged by our client’s trust in our team to guide them in their journey through the digital asset ecosystem, and for many, ethereum is an important part of that journey.”

Meanwhile, ETHE comes along with a range of positive fundamental developments on the Ethereum network. This is primarily the successful launch of ETH futures on the Chicago Mercantile Exchange (CME), which saw open interest of $55 million in the first week of trading.

Such an impressive debut combined with the booming Decentralized Finance (DeFi) and non-fungible token (NFT) industries brought ETH to a new all-time high (ATH) slightly above $2,000.

However, since then, ETH has dropped by 29%, falling as low as $1,360 on Feb. 23. But it managed to retrace some of its gains and is currently trading around $1,668 per coin, according to CoinGecko.

One possible reason for these price fluctuations may be the notable interest in Binance Smart Chain (BSC) and Binance Coin (BNB). Will ETH continue its spectacular rally amidst the surging gas prices? It will depend on whether the recently announced Ethereum Improvement Proposal (EIP) 1559 can improve the network’s transaction fees.

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Amy was born in Malmo, Sweden. She became interested in cryptocurrency due to her husband, who was an early investor in bitcoin. Now, Amy writes for a number of crypto outlets, invests in cryptocurrencies, and spends time with her cat Buterin.

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