The addition of these Ether ETFs — the first of their kind to be offered anywhere in the world — will make it easier, cheaper and more secure for to put crypto in your portfolio.
What exactly is Ether?
After Bitcoin, Ether is the highest valued of all cryptocurrencies. As of 4 p.m. on Tuesday, Ether was trading for just over $2,900 CAD per token. By contrast, Bitcoin was trading for just over $71,000.
While Ether gets categorized as crypto, it operates differently than other digital currencies.
Bitcoin can be used as an alternative to cash. Ether, however, is only used to pay for access to the Ethereum network, which uses blockchain technology to replace traditional means of storing computer data.
As more companies begin using Ethereum’s blockchain technology, the price of transaction fees starts climbing. That intensifies demand for Ether tokens and drives up their value.
"Two-thirds of all new companies that are built in this sector are now being built using the Ethereum standard," Alex Tapscott, CEO of NextBlock Global, told CBC back in 2017. "And the value of companies built on top of ethereum is now many billions of dollars."
And what’s an ETF?
An ETF is a bundle of stocks, bonds or other investments that investors can purchase shares in. The first ETF was actually launched in Canada in 1990: it included the top 35 companies on the Toronto Stock Exchange.
When you invest in an ETF, you own a portion of every asset that's part of the bundle. As with stocks, you profit from an ETF when you sell your shares at a higher price than what you paid for them.
Purchasing shares in an ETF is easy. It’s rarely more complicated than buying an individual stock. That makes betting on crypto as easy as tapping a few figures into your favourite DIY investing app.
Why the Ether ETF launch helps Canadian investors
Playing directly in the crypto market can be risky (Bitcoin has lost over 80% of its value twice already) and it’s not exactly straightforward.
Owning crypto usually means renting space in a digital “wallet,” which often means paying extra fees — and there has been no shortage of horror stories featuring investors who had their Bitcoin accounts wiped clean.
Conversely, investing in one of the new Ether ETFs — Purpose Investments’ Purpose Ether ETF (ETHH), CI Global Asset Managements’ CI Galaxy Ethereum ETF (ETHX), and Evolve ETFs’ Evolve Ether ETF (ETHR) — doesn’t require you to own the underlying cryptocurrency itself.
But when Ether’s value goes up, so will the value of your portfolio.
The only cost to the investor is the management fee, which the three Ether ETFs are already competing over: Purpose’s ETF charges a management fee of 1%. CI Galaxy charges 0.4%. And Evolve is waiving its management fee until May 31, when it will revert to 0.75%.
The launch also allows Canadians to partake in a little crypto patriotism. Not only was the Ethereum platform the brainchild of then-19-year old Vitalik Buterin, a Russian-Canadian who briefly attended the University of Waterloo, but Canada is also way ahead of the U.S. in terms of allowing crypto ETFs to trade publicly.
Despite pressure from leading wealth funds, the Securities and Exchange Commission has so far resisted permitting any U.S.-originated crypto ETFs to trade on the New York Stock Exchange.
Canada, though, now has four home-grown options to choose from: the three new Ether ETFs launched Tuesday, as well as Purpose’s Bitcoin ETF, which, after only two months of activity, is already valued at $1.4 billion.
How you can participate
If you’re itching to see what all the fuss is about, becoming a crypto investor has never been simpler. It’s as easy as downloading an investing app like Wealthsimple that allows you to add ETFs to your portfolio.
Many of today's do-it-yourself investing apps also allow you to invest in cryptocurrencies directly.
The debut of the Ether ETFs is further proof that cryptocurrencies are here to stay — and that investing will never be the same.