Grayscale Withdraws Ethereum Futures ETF Application, Possibly Influenced by SEC
On May 7th, Grayscale Investments, the world’s largest crypto asset manager, announced the withdrawal of its application for an Ethereum futures ETF with the U.S. Securities and Exchange Commission (SEC). Grayscale did not specify the reasons for the withdrawal, only noting that since the initial submission on September 19, 2023, the SEC had repeatedly postponed its decision, requesting more time to review the proposal on November 15 and December 18 of last year, and again on March 22.
The application was originally intended to increase legal pressure. This move has led to widespread speculation. James Seyffart, a senior ETF analyst at Bloomberg, suggested that the application might have been a strategic move, using the Ethereum futures ETF as a “Trojan horse” to expose inconsistencies in the approval processes of Bitcoin futures and spot ETFs during Grayscale’s litigation against the SEC. Last August, the U.S. Federal Appeals Court sided with Grayscale in a lawsuit against the SEC, criticizing the SEC’s approval of Bitcoin futures ETFs while rejecting Bitcoin spot ETFs.
However, Seyffart expressed confusion over Grayscale’s decision to withdraw, especially since the SEC is due to make a decision on at least one spot Ethereum ETF by May 23, with VanEck’s application being the next in line for review on that date, followed by deadlines for ARK 21Shares and Hashdex on May 24 and May 30, respectively.
Seyffart further speculated, “Honestly, I don’t know why they would do this. It seems logical to let the SEC make a decision on the ETH futures ETF, and then move forward based on that decision. Perhaps the SEC had a discussion with Grayscale that led them to withdraw? (This is purely speculative.)”
There is also a theory that Grayscale might have withdrawn the application to improve the chances of getting a spot ETF approved, although this seems unlikely, as the SEC might approve an Ethereum futures ETF while still rejecting a spot ETF.
