Grayscale Investments, the world’s largest cryptocurrency asset manager, withdrew its application for an Ether futures exchange-traded fund (ETF) just three weeks before the US Securities and Exchange Commission (SEC) was set to rule on several spot ETH ETFs. The Grayscale Ethereum Futures Trust application was filed in September 2023 and proposed an ETF that would track Ether futures contracts on the Chicago Mercantile Exchange (CME). If approved, it would have been listed on the New York Stock Exchange. Bloomberg ETF analyst James Seyffart speculated that Grayscale might be using the futures ETF as a strategic tool to pressure the SEC to approve a spot Ether ETF – a product that directly tracks the price of Ethereum itself.
The sudden withdrawal of the Grayscale ETF application has left analysts scrambling to understand the reason behind the decision. The move comes just weeks before the SEC has deadlines to rule on several spot Ether ETF applications from other companies, including VanEck, ARK 21Shares, and Hashdex. The SEC recently announced a delay in its decision regarding the Invesco Galaxy spot Ethereum ETF, setting the next deadline for July 5, 2024. The SEC’s stance on spot Ether ETFs remains unclear, as SEC Chair Gary Gensler has offered no specific timeline for a decision, stating that the filings will be taken up at the appropriate time by the five-member Commission.
The withdrawal of Grayscale’s ETF application has left the fate of spot Ethereum ETFs uncertain. While applications from Invesco Galaxy, BlackRock, and Fidelity are still expected in the coming months, industry experts anticipate a similar batch decision-making process from the SEC, similar to its approach with spot Bitcoin ETFs in January 2023. Bloomberg analyst James Seyffart has expressed skepticism, suggesting that the current round of Ethereum ETF applications might ultimately be denied. The market sentiment is uncertain, with many analysts puzzled by Grayscale’s decision to withdraw the ETF application just before the SEC was set to rule on it.
The withdrawal of the Grayscale Ether futures ETF has raised questions about the company’s strategy and the future of ETFs tied to Ethereum. It remains to be seen how the SEC will handle the remaining spot Ether ETF applications from other companies in light of Grayscale’s decision. Despite the uncertainty surrounding the approval of spot Ether ETFs, the cryptocurrency industry continues to evolve and attract interest from investors looking to gain exposure to digital assets through regulated investment vehicles such as ETFs. Grayscale’s move to withdraw its ETF application may have wider implications for the cryptocurrency market as a whole.
