Grayscale has pulled its Ethereum futures ETF application with the SEC, submitted on September 23, 2023, citing repeated delays. The SEC’s latest postponement, on March 22, added to the frustration. Grayscale’s past win against the SEC on Bitcoin futures ETFs shaped its Ethereum ETF strategy.
Grayscale, a top player in managing cryptocurrency assets, has made it clear they’re dropping their application for an Ethereum futures ETF. They initially applied on September 23, 2023, but now they’ve pulled out. Grayscale didn’t give specific reasons, but it seems they’re reacting to the SEC’s recent decisions on digital currencies. The SEC rejected some, postponed others, like on November 15, December 18, and March 22. Grayscale’s move to withdraw the ETH ETF from the market signals a change in their stance. The SEC’s previous ruling in favor of Grayscale over a Bitcoin futures ETF, despite approving other Bitcoin futures providers, is a notable case. These providers help handle crypto deliveries during market fluctuations.
Grayscale’s Strategic Moves and Application Withdrawal
James Seyffart, an ETF analyst at Bloomberg, suggested that Grayscale’s application for an Ethereum futures ETF might have been a tactical move to replicate their past success against the SEC. By seeking approval for the ETF while withholding an application for an Ethereum spot ETF, Grayscale could have aimed for a direct confrontation. However, the withdrawal of the application hints at a possible backtrack, possibly to avoid legal battles.
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
Speculations on social media added fuel to the discussion surrounding Grayscale’s decision. Some suggested that the SEC’s potential regulation on spot ETFs could have prompted Grayscale’s withdrawal. Seyffart disagreed with this notion, deeming it less likely. While Grayscale’s strategic legal maneuvers have been noted by the courts, the re-filing of the application might be a more cautious approach by the SEC in response to legal concerns raised by Grayscale and other parties.
SEC Scrutiny and Ethereum Spot ETFs
Despite heightened scrutiny and skepticism from analysts regarding the SEC’s approval of Ethereum spot ETFs, Grayscale’s withdrawal came as a surprise. Analysts were unsure if the SEC would greenlight such ETFs, given their past stance on Ethereum as a regulated security.
However, recent optimism surfaced following the SEC’s approval of Bitcoin spot ETFs. This approval not only signaled potential growth in Bitcoin’s price but also suggested a positive trajectory for the entire cryptocurrency market.
Unfortunately, Ethereum spot ETFs face increasing uncertainty. A significant setback occurred last year when the SEC deemed Ethereum a regulated security, contradicting earlier statements indicating no plans for Ethereum regulation. This conflicting information casts doubt on the future of Ethereum spot ETFs.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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