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8 May 2024, Wednesday – Prominent cryptocurrency asset management Grayscale withdrew its application for a rule change from the Securities and Exchange Commission (SEC) on Tuesday, abandoning its intention to launch an Ethereum futures exchange-traded fund (ETF).
The withdrawal notice for Grayscale’s ETH ETF, which was first filed on 19 September 2023, just cites the multiple delays noted by the SEC; it does not however explain why Grayscale changed its mind.
On 15 November 2023, 18 December 2023, and ultimately 22 March this year, the federal regulator announced that it would require additional time to consider the request.
A post on X by Bloomberg’s ETF expert James Seyffart, stated that it’s an intriguing move. He said, “this was a trojan horse filing, to create the same circumstances that allowed Grayscale to win the GBTC lawsuit.”
UPDATE This is interesting. @Grayscale just withdrew their 19b-4 filing for an #Ethereum futures ETF. This was essentially a trojan horse filing in my view, in order to create the same circumstances that allowed Grayscale to win the $GBTC lawsuit (approve futures deny spot) pic.twitter.com/Kihj2dlQx1
— James Seyffart (@JSeyff) May 7, 2024
What’s Going on With Grayscale and the SEC?
Grayscale sued the SEC in August last year as a federal appeals court sided with the company. Grayscale had accused the regulator of approving Bitcoin futures ETFs in the past – which let traditional investors purchase shares that tracked the expected value of the digital asset – but rejecting Bitcoin spot ETFs, which are based on the current price of BTC.
Seyffart said that he believed Grayscale intended for the SEC to once more “approve futures, deny spot.” Hence, starting a new legal dispute.
He also posted on X, “It looks like they won’t be filing a lawsuit this time around.” According to Seyffart, Grayscale might have withdrawn their Ethereum futures ETF application in order to resubmit an altered one.
According to speculators, the action was taken in the face of growing doubts regarding the SEC’s willingness to approve the upcoming Ethereum spot ETFs – an idea that was once seen as a promising possibility following the agency’s approval of the selling of Bitcoin spot ETFs in January.
The introduction of Bitcoin spot ETFs is credited with starting a bull run for the leading cryptocurrency and pushing its price to a new all-time high in March 2024.
[PN] GRAYSCALE FUTURES ETHEREUM ETF: NOTICE OF WITHDRAWAL OF A PROPOSED RULE CHANGE TO LIST AND TRADE SHARES OF THE GRAYSCALE ETHEREUM FUTURES TRUST (ETH) ETF UNDER NYSE ARCA RULE 8.200-E, COMMENTARY .02 (TRUST ISSUED RECEIPTS)
— Phoenix » PhoenixNews.io (@PhoenixTrades_) May 7, 2024
Amid the Grayscale news, the likelihood of an Ethereum spot ETF being approved has been declining, most recently as a result of news that the SEC may have classed Ethereum as a regulated security last year, even though the agency had previously said in public that no decision had been made.
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