Ether futures exchange-traded funds (ETFs) saw a decline in value and limited volume activity on debut Monday. The VanEck Ethereum Strategy ETF (EFUT) was down 6.6% at 3:30 p.m. Eastern, while Bitwise Ethereum Strategy ETF (AETH) and ProShares Ether Strategy ETF (EETH) were trading 4% and 3.7% lower respectively.

The first bitcoin futures ETF in the U.S.—ProShares Bitcoin Strategy ETF (BITO)—began trading in October 2021.

How Ethereum Futures ETFs Work And Why Should You Care?

Ether, the native crypto asset of the Ethereum blockchain, is the second largest cryptocurrency by market capitalization, behind bitcoin. Ether futures ETFs, invest in futures contracts with ether being the underlying security, rather than investing directly into ether itself.

For investors, these products offer a way to gain cryptocurrency exposure without directly having to buy ether. However, cryptocurrencies are volatile, making investing in future ETFs risky.

But the ETF providers are trying to sweeten the deal. For example, the VanEck Ethereum Strategy ETF (EFUT) is structured as a C-Corp in an effort to offer "a more efficient tax experience for long-term investors," the company said.

Not Just Pure Play In Ether

Some providers are not limiting their offerings to just ether futures. Bitwise & ProShares have announced ETFs that would include both bitcoin and ether exposure.

The Bitwise Ethereum Strategy ETF will only contain ether futures contracts, while the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP) will contain a 50-50 split of ether and bitcoin futures contracts. The custodian for both of these funds is Bank of New York Mellon. This brings Bitwise's total number of crypto-related ETFs to five.

The ProShares Ether Strategy ETF will strictly contain exposure to ether futures contracts. However, the firm is also offering two products that combine exposure to the prices of bitcoin and ether.

The ProShares Bitcoin & Ether Equal Weight Strategy ETF (BETE) is intended to contain equal exposure to both bitcoin and ether, while the ProShares Bitcoin & Ether Market Cap Weight Strategy ETF splits price exposure between the two assets based on their current market capitalizations. All three of these ETFs are listed on the New York Stock Exchange.

Valkyrie was expected to change the strategy of their bitcoin futures ETF to also contain ether last week; however, this update has been delayed due to a regulatory issue with the SEC. This product will be known as the Valkyrie Bitcoin & Ether Strategy ETF once it has launched. Ether futures ETFs from Kelly ETFs and Volatility Shares are also expected to launch soon.

VanEck and others have filed to launch spot ether ETFs as well, but these applications are still awaiting Securities and Exchange Commission approval. Additionally, the SEC is considering the approval of a plethora of bitcoin spot ETF applications, most notably from BlackRock.