The world’s largest cryptocurrency asset manager Grayscale Investments 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 notice of withdrawal for the Grayscale Ethereum Futures Trust was filed on May 7th, leaving analysts scrambling to understand the sudden shift. The application, filed in September 2023, 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.
Grayscale Using Ether Futures ETF as a Strategic Tool?
Bloomberg ETF analyst James Seyffart previously speculated that Grayscale might be using the futures ETF as a strategic tool. He believed it could act as a “Trojan horse,” pressuring the SEC to approve a spot Ether ETF – a product that directly tracks the price of Ethereum itself.
However, Seyffart’s confusion mirrored the broader market sentiment. The withdrawal comes just weeks before the SEC has deadlines to rule on several spot Ether ETF applications from other companies, including VanEck (May 23rd), ARK 21Shares (May 24th), and Hashdex (May 30th).
Earlier this week, the SEC announced a delay in its decision regarding the Invesco Galaxy spot Ethereum ETF, setting the next deadline for July 5, 2024.
Idk why they’d do this honestly. In my mind might as well make the SEC write up an approval or denial for an ETH futures ETF and go from there? Maybe the SEC spoke with Grayscale about this… And whatever was said convinced Grayscale to withdraw? (This is a complete guess)
— James Seyffart (@JSeyff) May 7, 2024
Analysts Not Hopeful for ETH ETF Approval
The SEC’s stance on spot Ether ETFs remains unclear. In a recent interview with CNBC, SEC Chair Gary Gensler acknowledged the applications but offered no specific timeline for a decision. “That’s something in front of our Commission right now,” he stated. “We’re a five-member Commission, and those filings will be taken up at the appropriate time.”
Grayscale’s withdrawal leaves the fate of spot Ethereum ETFs hanging in the balance. 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, mirroring its approach with spot Bitcoin ETFs in January 2023.
Bloomberg analyst James Seyffart has expressed scepticism, suggesting the current round of Ethereum ETF applications might ultimately be denied.