Grayscale Withdraws its ETH Futures ETF Application to SEC Amid Delays

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Key Takeaways

  • The development comes three weeks before the SEC’s deadline for a decision on the matter.
  • James Seyffart stated that he believed Grayscale might have withdrawn its Ethereum futures ETF application to re-file an amended one

Crypto asset manager Grayscale has withdrawn its 19b-4 application for an Ether futures exchange-traded fund (ETF).

On May 7, Grayscale filed a notice of withdrawal for the Grayscale Ethereum Futures Trust with the United States Securities and Exchange Commission (SEC) on May 7. The latest development comes three weeks prior to the SEC’s deadline for a decision on the matter.

Grayscale has not stated an explicit reason for the withdrawal. However, the withdrawal notice highlights the series of delays initiated by the SEC since the filing on September 19, 2023, with the regulator requesting additional review time on November 15, December 18, and March 22 of this year. The Ether Futures ETF  would have been listed on the New York Stock Exchange had it been approved.

Commenting on Grayscal’s decision to withdraw, Bloomberg ETF analyst James Seyffart stated that he believed Grayscale might have withdrawn its Ethereum futures ETF application in order to re-file an amended one

He also expressed confusion as to why Grayscale would withdraw now, when the SEC will be forced to make a decision to approve or deny at least one spot Ether ETF application on May 23.

The SEC and Grayscale tussle over spot ETFs has been going on for quite some time. In October 2023, a court ordered in favour of Grayscale asking the SEC to scrap its rejection of the asset manager’s spot bitcoin ETF application. The order reinstated that the SEC was “arbitrary and capricious” in its decision to reject Grayscale’s attempt to convert its roughly $17 billion Grayscale Bitcoin Trust (GBTC) into a spot ETF.

Spot Ethereum ETFs would offer a way to invest in ETH without directly owning the crypto. However, the regulatory agency remains hesitant to approve them.

The likelihood of the SEC approving a spot Ether ETF remains dim. The woes of crypto asset managers were further solidified by reports that surfaced in 2023 stating that the SEC has internally considered Ethereum to be a security for over a year.

Earlier this week, the SEC delayed the decision on the Invesco Galaxy Ethereum exchange-traded fund setting its next deadline to July 5, 2024, to approve or disapprove the proposed spot ether ETF. 

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Saniya Raahath
Saniya Raahath

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