Grayscale, one of the largest financial firms in the crypto industry, is reported to have officially withdrawn its application for permission regarding the issuance of an Ethereum Futures ETF.
The withdrawal of this permission was not executed with publication to customers or the crypto market, leading to much speculation surrounding this decision.
An ETF analyst named James Seyffart stated that this move is a strategic step, similar to their approval of the Bitcoin Futures ETF.
Grayscale Officially Withdraws Application for Ethereum Futures ETF
It is reported that Grayscale has officially withdrawn its application for the issuance of a new asset-based ETF, which was based on Ethereum futures contracts.
This news began to spread after Grayscale’s licensing was no longer visible on the SEC or Securities and Exchange Commission website.
This license had previously been applied for since late last year, but approval or rejection from the SEC is still pending.
The SEC itself has a poor reputation with crypto, including delays in approving or rejecting a crypto-related asset.
The withdrawal of this application was officially observed between May 7, 2024, and May 8, 2024, making this news very recent.
Grayscale has not made any public statements regarding this decision, but speculation is growing around it.
One speculation is that the SEC’s current view of Ethereum makes approval increasingly difficult, so Grayscale is giving up temporarily.
This is because the SEC is currently facing several lawsuits, including one with Consensys regarding the perception that Ethereum is a security or commodity-based asset.
In that lawsuit, it was stated that since 2023, the SEC has considered ETH as a security, so all its transactions could be deemed illegal.
This statement was challenged as being weak, especially when referring to the ongoing 2020 case between Ripple and the SEC.
The SEC’s latest decision on crypto-based assets was on March 22, 2024, where several crypto-related ETFs were rejected.
Due to this rejection, many speculate that Grayscale is giving up because they anticipate rejection.
A Strategic Plan?
Despite this speculation, there is another view from ETF analyst James Seyffart, an ETF analyst at Bloomberg.
He states that there is a possibility that the withdrawal of this application is a strategic move by Grayscale, aimed at obtaining approval.
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
This move is considered to mirror the previous application process for the Bitcoin Futures ETF, where initially, the decision regarding that ETF was repeatedly postponed and finally approved.
At that time, Grayscale’s ETF for Bitcoin Futures did not receive approval, but Grayscale added a new application for the launch of the Bitcoin Spot ETF.
Eventually, the Bitcoin Spot ETF was rejected, but the Bitcoin Futures ETF was approved, so there is a possibility that the same steps will be repeated.
It should be noted that at that time, the Bitcoin Spot ETF had not been approved, so the closest ETF to crypto was the Bitcoin Futures ETF.
At that time, Grayscale’s Bitcoin Spot ETF was still an ETP named GBTC, so it had a different legal status than it does now.
This is a speculation that is quite understandable, as there is a possibility that this assumption is currently being made.
However, the timing of its implementation is still unknown, as Grayscale has not commented on the reasons for this move.
Uncertainty may increase with the upcoming elections at the end of this year, with the possibility of the SEC undergoing a cabinet change.
Overall, the impact of this Ethereum ETF will not be as significant as that of Bitcoin, especially considering the variety of assets tied to Ethereum that institutional investors can already purchase.
But, it cannot be denied that if there were a new Ethereum ETF, its short-term impact would be significant in driving up ETH prices by creating positive sentiment in the crypto market.
