Ethereum ETF approved in Brazil increases chances for ETH price to jump

The Brazilian Securities Regulator (CVM) has approved the Exchange Traded Fund tracking the performance of the top altcoin Ethereum. QR Capital’s ETF will buy Ethereum in the open market and secure it using Gemini’s custodial solutions. 

Brazil investors now have access to Ethereum

QR Capital is a blockchain investment firm and holding company making strides in crypto with the launch of its Exchange Traded Funds (ETFs). Earlier today, the company announced the approval of its Ethereum ETF (ticker QETH11) and its listing on the Brazilian Stock Exchange. 

The exchange is the first in Latin America to list an ETF that is 100% invested in Ethereum. 

The fund will follow the CME CF Ether Reference rate and provide standardized and secure exposure to institutional investors. This approval comes three weeks after the launch of the company's Bitcoin ETF (QBTC11). 

In a note, QR Asset Management said:

The Brazilian investor now has the possibility of exposure to two largest and most valuable digital assets in the world, in a regulated, simple and secure manner. It is no longer necessary to register on exchanges, create private keys or worry about secure custody since the fund has institutional-level custody in deep cold storage, provided by Gemini - a company specializing in the custody of cryptocurrencies founded by the Winklevoss twins - a service not very accessible to the common investor.

The struggling Brazilian economy is pushing investors towards digital assets in an effort to revive the country’s financial system and capital inflow. This is driving Brazil’s stock exchange to list ETFs and offer investors a regulated environment for trading in cryptocurrencies. However, the launch of an altcoin ETF for Litecoin or Cardano, that is 100% invested in the underlying cryptocurrency, like QETH11 is likely to make cryptocurrency exchanges obsolete. 

Indeed, ETF offerings on the stock exchange are directly competing with crypto exchanges. Since they separate the volatility and hassle of holding funds on an exchange wallet from the crypto investment process, ETFs may be more lucrative to investors. There is no real incentive for investors to hold these altcoins on exchanges, instead, they would prefer holding shares of an ETF that reduce the volatility and exposure. 

Brazil-based asset manager Hashdex is in the process of launching a product that may increase the competition for both QR Capital and crypto exchanges. 

As the carbon zero Bitcoin narrative gains momentum globally, Hashdex has come up with a Bitcoin ETF with the objective of neutralizing carbon emissions. A portion of the management fees collected by the fund will be used to buy crypto credits. 

These credits will offset the carbon produced by the Bitcoin that the fund will hold. 

BITH11 will hit the Brazilian stock exchange in August 2021. Now investors have options to choose from when it comes to regulated Bitcoin ETFs in Brazil. It will be interesting to see if crypto exchanges like Mercado can compete with traditional financial institutions.