Evolve Funds Group Inc. (“Evolve”) has filed the final prospectus in plans to launch the world’s first Ether ETF (“ETHR” or the “ETF”). ETHR is expected to begin trading on Tuesday, April 20, 2021 on the Toronto Stock Exchange (“TSX”), subject to TSX approval. ETHR is designed to provide investors with direct exposure to Ether, currently the world’s second-largest cryptocurrency by market capitalization.
“We are very excited to have launched one of the world’s first bitcoin ETFs and now plan to launch the world’s first Ether ETF,” says Raj Lala, President and CEO at Evolve. “Similar to bitcoin, investors will now be able to trade Ether as simple as buying shares through their bank or brokerage. ETHR will provide daily liquidity, transparency and security through a regulated ETF structure.”
ETHR will invest directly in Ether, the cryptocurrency used to pay for transaction fees and computational services on the Ethereum network, the most actively used blockchain. All Ether transactions are recorded on the Ethereum network, which is a decentralized, open-source blockchain featuring smart contract functionality.
ETHR provides investors with exposure to the daily price movements of the U.S. dollar price of Ether by utilizing the benefits of the creation and redemption processes offered by the exchange traded fund structure. ETHR will not seek exposure through derivatives or futures contracts. Gemini Trust Company, LLC (“Gemini”) will act as the Sub-Custodian in respect of ETHR‘s holdings of Ether. The ETF will directly own Ether on the Ethereum blockchain, held in Gemini’s cold storage system and protected in accordance with industry-leading protocols.
The daily NAV will be calculated based on the CME CF Ether-Dollar Reference Rate (“ETHUSD_RR”), a once-a-day benchmark index price for Ether denominated in U.S. dollars and administered by benchmark administrator, CF Benchmarks Ltd. ETHUSD_RR is currently the settlement index for futures contracts listed by CME Group. CF Benchmarks Ltd is also the index provider for Evolve’s Bitcoin ETF, trading on the Toronto Stock Exchange (“TSX”) under the ticker symbols EBIT and EBIT.U.
“Evolve’s Ether ETF provides resilient exposure through a tried and trusted design – identical to the EBIT Bitcoin ETF – to one of the most mature and exciting cryptocurrency projects in the space to date,” says Sui Chung, CEO at CF Benchmarks Ltd. “By tracking the CME CF Ether Dollar Reference Rate from CF Benchmarks, investors can finally add a regulated and liquid product to their portfolios that tracks the ETH spot price. Regulated financial products are vital for the continuing maturation of the cryptocurrency space.”
ETHR intends to invest in Ether on a passive basis, the ETF’s holdings will not be actively managed and accordingly, will not be hedged or repositioned to attempt to take defensive positions if the price of Ether declines or is expected to decline.
“The investment process is paramount when investing in Ether,” says Elliot Johnson, Chief Investment Officer and Chief Operating Officer at Evolve. “This ETF will utilize the same professional and transactional cryptocurrency expertise of world-class custodians, counterparties and vendors, as used in our bitcoin ETF, to ensure investor confidence in their Ether investment.”
ETHR is available in Canadian dollar denominated unhedged units (TSX Ticker: ETHR), and U.S. dollar denominated unhedged units (TSX Ticker: ETHR.U). ETHR does not seek to hedge any foreign currency exposure in respect of either the USD Units or the CAD Units.