Ethereum ETFs are coming. Will they be able to revive lukewarm crypto markets?

Gary Gensler, Chairman of the SEC, is not one to reveal his cards, but yesterday gave as optimistic a forecast as one could expect on Ethereum ETFs, Speaking at the Bloomberg Invest conference. In between his usual frosty statements about the crypto industry, including accusing his interviewer of chasing “clicks,” Gensler said the process of engaging with issuers was “running smoothly.”

Gensler’s rare nod appears to confirm Bloomberg’s predictions the soothsayers that ETFs could launch as early as July 2. With crypto assets from Coinbase to Bitcoin crater In recent days, could the arrival of an Ethereum ETF reinvigorate the bull market? After all, approval and launch The rise in Bitcoin ETFs in January served as a catalyst for the current rally.

The short answer is: probably not. Ethereum has always been Bitcoin’s lesser-loved little brother, even with its new smart contract capability, improved transactions, staking, and many other benefits. It’s been years since anyone predicted flipping, that legendary day when Ethereum will overtake Bitcoin, with a straight face.

I met with Christopher Perkins, the president of the venture capital firm CoinFund, who explained to me that one of the main challenges for Ethereum will be building a brand image. Bitcoin is easy to use. The proto-cryptocurrency has claimed the nickname “digital gold,” which any investor can understand. A baby boomer looking to invest the millions of dollars earned from selling a house he bought in 1970 for $10,000, however, might have a harder time understanding Ethereum’s value proposition. What exactly is a smart contract, and why should we care? “These baby boomers, who have money, are not aping things,” Perkins told me.

Despite the hype surrounding Bitcoin ETFs, we’re seeing slow adoption as investors become more comfortable with the new asset class. As Perkins said, ETFs offer two primary benefits: regulatory certainty coupled with operational scalability, or an improved user experience. Bitcoin, thanks to its early commodity designation, was never really in a regulatory gray area, though ETFs allowed people to buy them directly in their brokerage accounts, rather than setting up a Coinbase or Robinhood account. With Ethereum, however, the approval and launch of ETFs truly creates a security moat that didn’t exist before, especially after months of speculation that the SEC would reject applications.

Additionally, an Ethereum ETF offering a yield could be a game-changer, if the SEC ever approves it. Last year, Perkins led a project to provide a benchmark rate for staking yield on Ethereum, which he pointed out is often higher than Treasury rates, when adjusted for inflation. “The ETF is going to be very important, but it’s also imperfect because it’s going to deprive investors of that return right from the start,” he said.

If Ethereum ETFs do finally launch next week, or soon after, don’t expect a surge in adoption. But Perkins said the long-term view is needed: “This is just another step in mainstreaming and reducing regulatory risk.”

Leo Schwartz
leo.schwartz@fortune.com
@leomschwartz

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