Grayscale Investments has officially retracted its application for an Ethereum futures ETF, originally set for a decision by the U.S. Securities and Exchange Commission (SEC) by May 30. This strategic withdrawal occurs just weeks ahead of the SEC’s deadline to rule on several key spot Ether ETF applications, adding an unexpected twist to the saga.
Filed on September 19, 2023, Grayscale’s proposal aimed to list an Ethereum futures ETF on the New York Stock Exchange. This move was part of a broader strategy, speculated by analysts, to potentially pave the way for approval of a more contentious spot Ether ETF. James Seyffart, a Bloomberg ETF analyst, previously labeled the effort a “trojan horse,” intended to coerce the SEC into a favorable decision on the spot ETF.
Despite the high stakes, Grayscale decided to pull its application on May 7, bewildering many market watchers. Seyffart expressed his confusion, questioning the timing of the withdrawal given that the SEC is poised to rule on at least one spot Ether ETF by May 23. This move, he noted, eliminates any potential for Grayscale to challenge the SEC’s decision legally, should it not favor them.
“Grayscale’s move to withdraw its application so close to the SEC’s decision date is truly puzzling,” Seyffart commented. “There’s now no way for them to pursue legal actions should their spot ETF not get approved, an avenue they might have kept open with the futures ETF in play.”
The landscape for Ethereum ETFs has been fraught with speculation and uncertainty. While Seyffart and his colleague, Eric Balchunas, also at Bloomberg, initially gave a 25% chance of approval for the spot Ether ETFs back in January, down from a more optimistic 70%, Grayscale’s recent action doesn’t seem to affect these probabilities.
As the SEC deliberates, comments from SEC Chair Gary Gensler indicate ongoing consideration without a hint at the direction of their decision. “That’s something in front of our commission right now. We’re a five-member Commission, and those filings will take up at the appropriate time,” Gensler noted in a recent CNBC interview.
The forthcoming decisions on applications from other major players like VanEck, ARK 21Shares, Hashdex, Invesco Galaxy, BlackRock, and Fidelity, scheduled throughout the summer, are highly anticipated. Industry experts are watching closely, drawing parallels to the SEC’s handling of previous decisions on spot Bitcoin ETFs.
As the SEC gears up for these critical rulings, the cryptocurrency and investment communities remain on edge, watching for any sign that might indicate how the SEC will navigate the complex landscape of cryptocurrency ETFs.
