Leading cryptocurrency asset manager Grayscale has abandoned plans to offer an exchange-traded fund (ETF) for Ethereum futures and withdrew its application for a rule change to the Securities and Exchange Commission (SEC) on Tuesday.
The withdrawal notice for the proposed Grayscale Ethereum Futures Trust ETF does not specify why Grayscale changed its plans and only cites multiple delays raised by the SEC since it was first filed on September 19, 2023. Proposals will be reviewed on November 15, December 18 and finally on March 22 of this year.
ETF analyst James Seyffart bloombergHe said it was an interesting move.
“In my view, this was essentially a Trojan horse filing to create the same situation that allowed Grayscale to win the GBTC. “I’m filing a lawsuit,” he said.
Update This is interesting. @Grayscale I just withdrew my 19b-4 application. #Ethereum Futures ETFs. In my opinion, this was essentially a Trojan horse filing to create the same situation that would have allowed Grayscale to win. $GBTC Litigation (point of refusal to accept gift) pic.twitter.com/Kihj2dlQx1
— James Seyff (@JSeyff) May 7, 2024
A federal appeals court sided with Grayscale in its lawsuit against the SEC in August. We called out Grayscale for previously approving a Bitcoin futures ETF. This allowed traditional investors to purchase stocks that track the expected value of the digital asset, while denying them spot Bitcoin. This is an ETF linked to the current price of BTC.
Seyffart said Grayscale thought the SEC wanted to “approve futures and reject spot” again, starting another legal showdown.
“Good sign there won’t be a lawsuit this time,” he tweeted.
Grayscale likely withdrew its Ethereum futures ETF application to resubmit with corrections, Seyffart acknowledged.
“Withdrawing and refiling is less work for the SEC, but at the same time it means there’s no way for Grayscale or anyone else to file a lawsuit now,” he said.
When one Twitter commenter suggested that Grayscale withdrew its application because the SEC would approve an Ethereum spot ETF, Seyffart scoffed.
“I don’t think it will happen (although the odds are not zero). So I think that’s a different thing,” he wrote. “That said, this is one of the few reasons I would voluntarily withdraw if I were Grayscale.”
In fact, the move comes amid growing skepticism that the SEC would approve the creation of an Ethereum spot ETF, a once-promising prospect after allowing the sale of a Bitcoin spot ETF in January. The launch of a Bitcoin spot ETF is credited with sparking a bull market for the top cryptocurrency and helping set a new all-time high in March.
The odds of approval for an Ethereum spot ETF continue to fall, most recently with hopes dimmed by the revelation that the SEC classified Ethereum as a regulated security last year, despite public statements that no decision had been made.
Edited by Ryan Ozawa.