In a dramatic turn of events that caught the crypto industry off guard, asset management firm Valkyrie Funds abruptly halted its purchase of Ether futures contracts on September 29, 2023 — just one day after reportedly securing regulatory approval to add Ethereum exposure to its existing Bitcoin Strategy ETF (BTF).
TL;DR
- Valkyrie filed a 497 with the SEC on September 29, announcing it would stop buying Ether futures contracts immediately
- The firm had only begun purchasing ETH futures the previous day following fast-tracked SEC approval
- Bloomberg analyst Eric Balchunas speculated the SEC "must have threatened them to cut it out"
- Approximately nine Ethereum futures ETFs are still expected to begin trading on October 2
- VanEck pledged to donate 10% of its Ethereum ETF profits to Ethereum core contributors
The Valkyrie Reversal: A 24-Hour Whiplash
On September 28, news broke that the U.S. Securities and Exchange Commission appeared to be fast-tracking Ethereum futures ETF approvals ahead of a potential government shutdown. Valkyrie, one of the firms at the front of the pack, disclosed it had already begun purchasing Ether futures contracts for its combined strategy ETF, positioning itself to be among the first to offer Ethereum exposure in an ETF wrapper.
But by Friday morning, the firm had reversed course entirely. In a regulatory filing, Valkyrie stated: "Effectively immediately, The Fund will not purchase ether futures contracts until the effectiveness of an amendment to the Fund's registration statement contemplating the addition of ether futures contracts to the principal investment strategy of the Fund. Until such time, the Fund will unwind any existing positions in ether futures contracts."
The language was unambiguous — not only would Valkyrie stop buying, but it would actively unwind positions it had already established. Bloomberg senior ETF analyst Eric Balchunas offered a blunt assessment: "SEC must have threatened them to cut it out."
Why the Sudden Change?
Valkyrie had filed its unique Ethereum ETF application with the SEC back in August, seeking to convert its existing Bitcoin Strategy ETF (BTF) into a combined Bitcoin and Ether futures ETF. The firm appeared to be jumping the gun by purchasing ETH futures before its registration statement amendment was formally effective — a move that seemingly drew regulatory pushback.
The timing is notable. The SEC is facing an October 13 deadline to appeal the Grayscale Bitcoin Trust ruling at the D.C. Circuit Court of Appeals. Meanwhile, SEC Chair Gary Gensler warned that the agency would be reduced to "skeletal" staff if a government shutdown materialized, potentially delaying crypto-related proceedings and enforcement actions.
Nine Ethereum ETFs Still on Track for October
Despite Valkyrie's retreat, the broader Ethereum ETF launch timeline remains intact. According to Balchunas' analysis, approximately nine Ethereum futures ETFs are expected to begin trading on October 2. ProShares alone accounts for three of these funds, with two being combined Bitcoin and Ethereum products.
VanEck, another leading contender, took a different approach to stand out. The investment manager announced it would donate 10% of profits from its Ethereum ETF (EFUT) to The Protocol Guild, a compensation plan for Ethereum core contributors, for at least ten years. "If TradFi stands to gain from the efforts of Ethereum's core contributors, it makes sense that we also give back to their work," VanEck wrote.
Ethereum Price Responds to ETF Optimism
The Ethereum price has shown notable resilience amid the week's regulatory drama. As of September 29, Ether was trading around $1,668, reflecting approximately a 5% gain over the previous seven days. The broader market context shows Bitcoin holding steady near $26,912, with total crypto market capitalization around $2.61 trillion and the Fear and Greed Index sitting at a neutral 45.
The uptick in ETH price appears largely driven by growing institutional interest in Ethereum products and anticipation of the futures ETF launches. If approved, these products would mark the first Ethereum-based ETFs available to U.S. investors, potentially opening the door for significant capital inflows into the Ethereum ecosystem.
Why This Matters
The Valkyrie episode illustrates the razor-thin line crypto firms must walk with regulators. Even with the SEC apparently accelerating approvals, companies that move too aggressively risk being pulled back. However, the bigger picture remains bullish for DeFi and Ethereum: multiple Ethereum futures ETFs are launching, institutional infrastructure is being built, and the Grayscale decision continues to reshape the regulatory landscape. For DeFi advocates, every new regulated Ethereum product is a step toward mainstream legitimacy — even if the road there involves a few regulatory speed bumps along the way.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
approved then threatened in under 24 hours. the SEC under gensler was genuinely unpredictable
Valkyrie filing a 497 saying they would stop buying AND unwind existing ETH futures positions. that language was so blunt, they clearly got spooked hard
Balchunas speculating the SEC threatened them says everything. regulators fast-track then panic, classic
VanEck pledging 10% of ETH ETF profits to core contributors was a nice touch amid all the chaos. at least someone was thinking long term