Crypto ETFs other than Bitcoin and Ethereum funds will '100%' be approved: Grayscale

Grayscale's ETF chief is bullish that regulators will eventually have to approve exchange-traded funds based on cryptocurrencies other than bitcoin and ether.

David LaValle, Grayscale's global head of ETFs, was asked during a roundtable discussion on Wednesday if he thought exchange-traded funds based on other cryptocurrencies might gain approval in the next two to three years.

"I think 100%," he said. "The path to digital asset ETFs happened to be through this regulated market on the futures side, but as the digital asset market holistically continues to expand and to mature, I mean, we've already proven that we can do it with Bitcoin BTC -3.20% [and] we're having a really fruitful conversation around Ethereum ETH -2.50% ."

The roundtable discussion on ETFs and digital assets LaValle participated in on Wednesday was hosted by the New York Stock Exchange and moderated by The ETF Store President Nate Geraci.

Grayscale's GBTC fund, which was converted to a spot Bitcoin ETF, began trading in January and, despite billions of dollars in outflows, is still the largest on the market. While many in the industry expect applications for spot ether ETFs to be denied next month, there has been a growing consensus that the Securities and Exchange Commission will eventually approve the Ethereum-based investment vehicles.

ETF era for crypto

"Whether we get approval in May or later, we've demonstrated that the launch of ETF's lower cost and improved protections for investors looking to access this asset class; so I do think an Ethereum ETF is a question of when and not if," said Matt Hougan, chief investment officer at Bitwise Asset Management, who also participated in the roundtable.

Bitwise has also issued a spot bitcoin ETF on top of filing an application for a spot ether ETF.

ProShares Head of Investment Strategy Simeon Hyman, also on the roundtable, echoed LaValle's sentiments about the market eventually expanding to include other cryptocurrencies. "I can't imagine there won't be another couple currencies that emerge sufficient of scale and size for all of us to participate. It's got to happen," he said. Like Grayscale and Bitwise, ProShares also manages a spot bitcoin ETF.

Hougan went on to say that over the long term, he is optimistic about the approval and launch of new ETFs based on different digital assets. "We've entered the ETF era for crypto ... you're going to use this wonderful wrapper to give people what they want."

The consensus among the roundtable appeared to be that allowing investors to wager on digital assets like bitcoin through ETFs rather than requiring them to buy it themselves has triggered increased interest and exposure.

According to the panel, more investors are now considering investing a small portion of their available capital in digital assets, and ETFs provide a safer and easier way to do so.

"The [spot bitcoin] ETF coming to market has forced the conversation where advisors and financial professionals need to have an opinion," said LaValle, adding that the success of the bitcoin ETFs has translated into more advisors seriously considering adding bitcoin to their clients' portfolios.