Ethereum
Grayscale Ethereum Futures ETF application withdrawn
Bitcoin ETFs
A request for a rule change that would have allowed Grayscale Investments to offer an Ethereum futures exchange-traded fund has been withdrawn, leaving some analysts perplexed.
According to a Securities and Exchange Commission (SEC) filing TuesdayThe NYSE Arca Inc., the exchange on which the fund would have traded, had withdrawn the application on May 3.
“On May 3, 2024, the Exchange withdrew the proposed rule change,” the filing said without specifying the reasons for the decision.
The NYSE initially filed the application on September 19, 2023. The SEC has twice delayed making a decision on the application, most recently on March 22.
James Seyffart, analyst at Bloomberg ETF wrote in a Tuesday post on X/Twitter that he did not understand the reasons why the company was withdrawing. “I don’t know why they would do that honestly,” Seyffart wrote.
Unlike applications for Ethereum spot ETFs, which analysts say are unlikely to be approved imminently, nine Ethereum futures ETFs are already trading. The SEC approved a number of funds last October.
Since then, the funds have accumulated modest assets compared to early spot Bitcoin ETFs, which have soared since gaining SEC approval on Jan. 10 and began trading a day later.
The largest Ethereum futures ETF, the ProShares Ether Strategy ETF (EETH)has accumulated just $77 million in assets since its unveiling, which is meager compared to the nearly $17 billion that BlackRock holds. iShares Bitcoin Trust (IBIT) has collected during its four-month history.
A Grayscale spokesperson declined to comment.
Ethereum ETF Run
Some analysts have speculated that an Ethereum futures ETF could be used as leverage to push the SEC to approve an Ethereum spot ETF.
Last August, grayscale has reached a turning point legal victory in federal court against the agency after the SEC blocked its conversion of the Grayscale Bitcoin Trust (GBTC) into an ETF. In their ruling, the federal appeals court judges noted that the SEC’s blocking of the trust conversion was “arbitrary and capricious” because the agency had already approved Bitcoin futures ETFs. By having an Ethereum futures ETF, Grayscale could have used the same logic to sue the agency, Seyffart speculated.
“This was essentially a Trojan horse, in my opinion, to create the same circumstances that allowed Grayscale to win the GBTC case,” Seyffart wrote on X on May 7.
Yet the withdrawal appears to make this strategy less likely.
THE Grayscale Bitcoin Trust ETF (GBTC) currently has $18 billion in assets, despite bleeding billions. This fund, however, has a 1.5% fee, the highest among spot Bitcoin ETFs.
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Contact Lucy Brewster at lucy.brewster@etf.com.
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