Key Takeaways:
- Grayscale Withdraws ETF Application: Grayscale has withdrawn its application for an Ether futures ETF from the SEC’s consideration just three weeks before the decision deadline.
- Strategic Maneuvering: Analysts suggest that Grayscale’s withdrawal could be a strategic move related to its efforts to secure approval for a spot Ether ETF.
- Impact on Approval Odds: Despite the withdrawal, the likelihood of approval for upcoming spot Ether ETF applications remains low, with odds declining from 70% to 25% since January.
Grayscale has officially retracted its application for an Ether futures exchange-traded fund (ETF), originally filed with the U.S. Securities and Exchange Commission (SEC), as a strategic decision arrives just three weeks prior to the SEC’s deadline for a decision on this matter.
This withdrawal was marked by Grayscale’s submission of a notice to the SEC on May 7, effectively pulling the Grayscale Ethereum Futures Trust from consideration.
Grayscale has withdrawn its proposed Ethereum futures ETF, which @JSeyff says was a "trojan horse filing" that could have ended up in the courts. https://t.co/sMSZjyBZaA
— Decrypt (@decryptmedia) May 8, 2024
This move came unexpectedly close to the SEC’s scheduled decision date of May 30 for this particular ETF.
Originally submitted on September 19, 2023, the ETF would have been listed on the New York Stock Exchange if it had received approval.
Analysts, such as Bloomberg’s James Seyffart, speculated that Grayscale might have been attempting to leverage the futures ETF as a strategic play to facilitate the approval of its spot Ether ETF.
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
Seyffart expressed his perplexity over Grayscale’s sudden withdrawal, especially given the proximity to the SEC’s impending decision on May 23 regarding a spot Ether ETF.
Seyffart, alongside his colleague Eric Balchunas, noted that the probability of approval for spot Ether ETFs has significantly decreased from 70% in January to just 25% as of May.
Despite Grayscale’s withdrawal from the futures ETF application, this did not appear to alter the analysts’ expectations for the approval chances of the upcoming spot Ether applications.
Something to note here is that @Grayscale never filed an S-1 for its $ETH futures ETF, so the application was incomplete. The @SECGov may have wanted to see if a finished futures application was coming before considering its spot application.
— Eleanor Terrett (@EleanorTerrett) May 8, 2024
Investor demand for the existing… https://t.co/CMvZja7UYJ
Moreover, Seyffart highlighted that with the withdrawal, Grayscale has eliminated any potential legal recourse against the SEC should their application for a spot Ether ETF be rejected.
In an interview on May 7, SEC Chair Gary Gensler commented on the ongoing considerations within the commission regarding the spot Ether ETF applications, emphasizing the deliberative nature of the decision-making process involving all five commissioners.
Looking ahead, the SEC is set to make decisions not only on Grayscale’s application but also on those from other major firms like VanEck, ARK 21Shares, and Hashdex, with final deadlines stretching from May 23 to May 30.
Further decisions for applications from other entities such as Invesco Galaxy, BlackRock, and Fidelity are expected in the summer months of June, July, and August, mirroring a similar comprehensive approach taken with spot Bitcoin ETFs earlier in the year.
This strategic retreat by Grayscale underscores the complexities and tactical maneuvers prevalent in the evolving landscape of cryptocurrency investment products, particularly in relation to regulatory approval challenges.
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