Ethereum News Today: Grayscale Engineers Income Play Amid Ethereum's Volatility Surge

Grayscale Investments has introduced the Ethereum Covered Call ETF (ETCO), an exchange-traded fund designed to generate income by leveraging Ether's (ETH) volatility characteristics through a covered call writing strategy [2]. Launched on Sept. 4, 2025, the ETF is actively managed and targets a bi-weekly income distribution to shareholders [3]. According to Grayscale, ETCO aims to complement investors' existing Ethereum exposure by adding an income component while also offering some exposure to ETH price movements [2]. The fund achieves its objectives by systematically writing call options on Ethereum ETPs such as the Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Mini Trust (ETH) [3]. By doing so, ETCO collects premiums that could help mitigate potential downside volatility during market downturns, although this strategy may limit gains during upward price movements [2]. The expense ratio for ETCO is approximately 0.66%, with the fund maintaining at least 80% of its assets in derivatives tied to Ethereum ETPs [3]. Grayscale, which has been an SEC-registered investment adviser since 2022, clarified that ETCO does not invest directly in digital assets but relies on options contracts linked to ETPs [2]. This product joins Grayscale’s broader lineup of income-focused ETFs, including the Bitcoin Covered Call ETF (BTCC) and Grayscale Premium Income ETF (BPI) [2]. The launch of ETCO comes amid a period of renewed interest in Ethereum, as ETH has seen a 77% increase in price over the past 90 days and a 21% rise in the last month [4]. Krista Lynch, Senior Vice President of ETF Capital Markets at Grayscale, emphasized the firm’s commitment to innovation and the need to cater to diverse investor needs [2]. The Ethereum Covered Call ETF is marketed as an innovative solution for income-seeking investors, offering a unique approach to capitalizing on the volatility of one of the largest cryptocurrencies [2]. The fund’s strategy reflects a growing trend in the financial sector to explore alternative income-generating opportunities, particularly in the digital asset space [4]. ETCO’s launch is part of a broader effort by Grayscale to expand its offerings and meet the evolving demands of the cryptocurrency investment market [4]. The firm highlighted the importance of its existing Ethereum ETPs, ETHE and ETH, which have net assets of $4.80 billion and $3.18 billion, respectively [4]. As the market for Ethereum ETP options continues to develop, the ETCO ETF aims to provide a viable option for investors seeking to enhance their portfolios with structured income strategies [2]. The Ethereum Covered Call ETF operates within a regulatory framework that emphasizes the risks associated with derivative instruments and digital assets [2]. Investors are advised to carefully consider the investment objectives, risks, and expenses before investing in the fund [2]. Source: [1] Grayscale Launches Next Innovation for Income Seeking Investors with Grayscale® Ethereum Covered Call ETF (https://www.morningstar.com/news/globe-newswire/9522948/grayscale-launches-next-innovation-for-income-seeking-investors-with-grayscale-ethereum-covered-call-etf-ticker-etco) [2] Grayscale launches Ethereum covered call ETF (https://blockworks.co/news/grayscale-ethereum-covered-call-etf) [3] Grayscale Launches Ethereum Covered Call ETF to Generate Income From ETH (https://coingape.com/grayscale-launches-ethereum-covered-call-etf-to-generate-income-from-eth/) [4] Grayscale Launches Ethereum Covered Call ETF to Generate Income From ETH (https://coingape.com/grayscale-launches-ethereum-covered-call-etf-to-generate-income-from-eth/)