Ben Strack

Though the US currently hosts only four out of the top 25 crypto exchange-traded products (ETPs), successful attempts by firms to gain approval for over two dozen such offerings from the Securities and Exchange Commission could rapidly change that.



The largest crypto ETPs by far are Sweden-based XBT Provider’s Bitcoin Tracker One (COINXBT) and Ethereum Tracker One (COINETH), according to a Wednesday report by CoinGecko. The data is as of Sept. 11.



Both are exchange-traded notes (ETNs), which are debt instruments typically collateralized by the underlying exposure.



COINXBT and COINETH have roughly $4.4 billion and $2.6 billion in assets, respectively — well ahead of third-place Hashdex Nasdaq Crypto Index fund in Brazil, which has nearly $1.1 billion in assets under management.



The ProShares Bitcoin Strategy ETF (BITO) — a fund holding bitcoin futures contracts that launched in the US in October 2021 — has $915 million, while Canada’s Purpose Bitcoin ETF sits in fifth at $819 million.&nbsp;



Canada is home to six of the top 25 largest ETPs in the world, the CoinGecko data shows.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1250" height="1372" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=1024&amp;h=1024" alt="" class="wp-image-68033" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=1250 1250w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=273 273w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=933 933w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=234 234w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=238 238w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=200 200w, https://blockworks-co.imgix.net/wp-content/uploads/2023/09/Coingecko-ETP-rankings.jpg?w=73 73w" sizes="(max-width: 1250px) 100vw, 1250px" /></figure>



The crypto ETP rankings include nine ETFs, five ETNs, eight exchange-traded commodities (ETCs), two closed-end funds, and one investment trust.



However, if the SEC adjusts its stance, these top products could shift rapidly. Over the past decade, the US agency has turned down dozens of attempts from issuers aiming to introduce ETFs that would hold bitcoin directly.



Bloomberg Intelligence analyst James Seyffart said in July that a US spot bitcoin ETF “<a href="https://blockworks.co/news/approved-spot-bitcoin-etf-launch-size">could be the largest, if not one of the largest, launches in history</a>.”



Matt Hougan, chief investment officer of Bitwise, said <a href="https://blockworks.co/news/bitwise-cio-blackrock-btc-etf">during a webinar</a> last month that such a fund could attract $55 billion in net flows in its first five years on the market.



Read more: <a href="https://blockworks.co/news/us-spot-bitcoin-etf?utm_source=CryptoNews&amp;utm_medium=app">US spot bitcoin ETF not impossible — just ask the rest of the world</a>



Grayscale Investments’ court win against the SEC last month has led various industry watchers to believe <a href="https://blockworks.co/news/grayscale-sec-spot-bitcoin-etf">spot bitcoin ETF approvals are now more likely</a> in the next year or so.&nbsp;



<a href="https://blockworks.co/news/judges-grayscale-sec-ruling">Judges in the DC Circuit Court of Appeals ruled</a> that the SEC denying the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF — but allowing bitcoin futures ETFs to launch — was “arbitrary and capricious.”&nbsp;



The SEC is not forced to approve the product, but it cannot block GBTC’s conversion under the same reasoning.



GBTC currently has $16.2 billion in assets under management. When asked about competition the fund would face if US spot bitcoin ETFs are ultimately greenlit, <a href="https://blockworks.co/news/grayscale-bitcoin-etf-sec">Grayscale Chief Legal Officer Craig Salm said</a> GBTC is the only ​​”actual fund today with [assets under management], trading volume and investors.”



<h2 class="wp-block-heading">List of US live filings continues to grow</h2>



<a href="https://blockworks.co/news/blackrock-clout-bitcoin-etf-approval">The first-time proposal by asset management giant BlackRock</a> in June to launch a spot bitcoin ETF spurred other firms to reignite their previous efforts.&nbsp;



<a href="https://blockworks.co/news/franklin-templeton-bitcoin-etf">Franklin Templeton became the latest to file for a spot bitcoin ETF</a> on Tuesday.&nbsp;



Fund issuers have now sought to bring crypto ETFs to market that go beyond bitcoin, as more than a dozen <a href="https://blockworks.co/news/sec-consider-ether-futures-etfs">planned ETFs that would hold ether futures contracts</a> are now in front of the SEC.



<a href="https://blockworks.co/news/grayscale-victory-spot-ether-etf">Planned spot ether ETFs entered the fold last week</a>, with Ark Invest and 21Shares collaborating on one, and VanEck renewing its bid to launch another.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Re live ETF filings, there&#39;s now 15 Eth Futures, 12 spot bitcoin, 3 spot Eth and a partridge in a pear tree. <a href="https://t.co/e8p4pK1hqk">https://t.co/e8p4pK1hqk</a>&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1701681832712949811?ref_src=twsrc%5Etfw">September 12, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Most recently, Hashdex on Tuesday shared <a href="https://listingcenter.nasdaq.com/assets/rulebook/nasdaq/filings/SR-NASDAQ-2023-035.pdf">plans</a> to launch an Ethereum ETF that would hold both spot ether and ether futures contracts.&nbsp;&nbsp;



A spokesperson for the company declined to comment.&nbsp;



The Hashdex filing came after the company said in a filing last month that it intends to change its Bitcoin Futures ETF (DEFI) — launched in September 2022 — to a fund that also holds bitcoin directly.



Read more: <a href="https://blockworks.co/news/hashdex-bitcoin-etf?utm_source=CryptoNews&amp;utm_medium=app">How Hashdex’s planned bitcoin ETF differs from competing proposals</a>



Both of Hashdex’s proposals note that their net asset values would be calculated using spot bitcoin and ether prices derived from the prices of the assets’ respective futures traded on the Chicago Mercantile Exchange (CME) “to avoid any exposure to potential manipulation from unregulated exchanges.”



While <a href="https://blockworks.co/news/crypto-fund-trading-spot-etf">ether futures ETFs could launch as soon as next month</a>, the SEC has <a href="https://blockworks.co/news/sec-delay-decision-bitcoin-etf-blackrock">240 days to rule on the proposed spot bitcoin and ether funds</a>, bringing those deadlines to 2024.



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Sweden, Canada lead in crypto ETPs as proposal stack in the US grows

<div id="highlights-block_62c4712f8f69d" class="highlights">
 <ul>
 <li>21Shares has seen small outflows despite recent losses, firm’s director of ETP product told Blockworks</li>
 <li>Seven of the 15 worst-performing US ETFs in June were crypto-related funds</li>
 </ul>
 
</div>



The worst-performing European ETPs last month were all crypto products, and digital asset-focused ETFs in the US also notched some of the worst returns during the month.&nbsp;



The highest negative returns during the month in Europe went to the 21Shares Aave ETP, which yielded -52.6% in June, according to Morningstar data.



“These are abysmal returns,” ETF.com Senior Analyst Sumit Roy told Blockworks. “As volatile as crypto is, to see 50% declines in one month is truly astounding. It just speaks to how treacherous the current crypto market is.”



The firm’s Bitcoin Cash ETP, Ethereum ETP and Bitcoin Suisse ETP also made the list of top 15 worst-performing ETPs (exchange-traded products) during the month, with returns of -47.5%, -46.5% and -40.5%, respectively.



“As we’ve experienced turbulent markets, we’ve stayed in close communication with our clients and seen very little outflows as investors hold strong for the long-term,” Arthur Krause, 21Shares’ director of ETP product, told Blockworks in an email.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“In fact, we’ve seen inflows as investors buy the dip.”</blockquote>



The 21Shares Bitcoin ETP and Ethereum ETP recorded the biggest inflows in the European market in June, Krause added, with $20 million and $10 million in net new assets, respectively. The company launched the first ETP within its <a href="https://cms.blockworks.co/21shares-vying-to-build-out-crypto-winter-suite/" target="_blank" rel="noreferrer noopener">planned “crypto winter” suite</a> last week in an effort to help investors navigate the challenging market environment.&nbsp;



Crypto ETPs have been among the worst-performing products each month this year, aside from March, Morningstar Investment Specialist Valerio Baselli told Blockworks in an email. The entire crypto ecosystem is under pressure, as evidenced by bitcoin&#8217;s fall to below the $20,000 mark at the end of the month, he added.



Bitcoin’s price was about $19,620 at 12:30 pm ET, according to data compiled by Blockworks — down roughly 0.5% from 24 hours ago and down about 34% from a month ago.



“As usual, the debate is highly polarized,” Baselli said. “Crypto skeptics think this is the moment the bubble bursts and are relishing the daily lurches downwards, while true believers are exhorting other zealots to keep the faith, ride this wobble out, and even add to their holdings.”



June was the worst month since 2011 for bitcoin, Baselli said, noting that the asset — originally thought to be uncorrelated to equity markets — plunged in parallel with US equities. The second quarter of 2022 was the worst since 1970 for the S&amp;P 500, while the Nasdaq recorded its weakest half-year since 1998, he added.



“The asset class is firmly entrenched in a deep bear market, and these returns are a reflection of that,” Roy said. “It&#8217;s a reminder that crypto and crypto ETPs are extremely high risk, with a similar risk profile to speculative tech stocks.”



As for US ETFs, seven of the 15 worst-performing funds in June were crypto funds, according to Morningstar Direct data obtained by Blockworks.



VanEck’s <a href="https://www.vaneck.com/us/en/investments/digital-assets-mining-etf-dam/" target="_blank" rel="noreferrer noopener">Digital Assets Mining ETF</a> (DAM) saw the lowest monthly returns within the category, at -43%. The asset manager’s <a href="https://www.vaneck.com/us/en/investments/digital-transformation-etf-dapp/" target="_blank" rel="noreferrer noopener">Digital Transformation ETF</a> (DAPP) endured a total return of -41% over the span.&nbsp;



Bitcoin futures ETFs saw similar returns, with such products by ProShares, Valkyrie Investments and VanEck also yielding roughly -41%. Global X’s <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">Blockchain and Bitcoin Strategy ETF</a>, which invests in a mix of equity securities of blockchain companies and US-listed bitcoin futures, performed only about a half percentage point better.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.