The past week saw Grayscale withdraw its application for offering an exchange-traded fund (ETF) for Ethereum Futures that it had submitted to the Securities and Exchange Commission (SEC).
The notice of withdrawal for the application of the proposed Ethereum Futures ETF does not reveal why the leading asset manager changed its plans.
The reasoning
The only detail that was mentioned was the various delays from the SEC that had been happening after the Ethereum Futures ETF application was first filed on September 19th, 2023.
The first delay from the federal regulator had come on November 15th, when it said that it needed more time for reviewing the proposal. It was delayed again on December 18th and then on March 22nd of this year.
Bloomberg’s ETF analyst, James Seyffart, said that this move by the asset manager was an interesting one.
He said that in his opinion, it was a Trojan horse filing aimed at creating the same circumstances that had allowed Grayscale to win its lawsuit against the SEC regarding its GBTC fund.
Back in August, a federal appeals court had favored Grayscale in its case against the securities regulator after the company had called out the SEC for denying spot Bitcoin ETF applications.
The background
Grayscale had asserted that the securities regulator had approved Bitcoin Futures ETFs previously that allowed traditional investors to purchase shares tracking the anticipated value of the digital asset.
However, it had turned down spot Bitcoin ETFs, investment products that are tied to the market price of Bitcoin.
Seyffart said that he believed Grayscale was trying to get the SEC to approve futures once more and deny spot ETFs, which would set the stage for another legal showdown.
He said that it was a good thing that the asset manager was not planning to pursue a lawsuit this time around.
The possibilities
Seyffart stated that there was also a possibility that Grayscale had withdrawn its Ethereum futures ETF application to make amendments and then re-file it.
He said that doing so would certainly mean less work for the SEC, but it also means that there is no reason for Grayscale or anyone else to sue the regulator.
There was also speculation that Grayscale had withdrawn its application because the SEC was going to give the green light to Ethereum spot ETFs.
However, Seyffart said that it was highly unlikely and this means that there was probably another reason why Grayscale had chosen to withdraw its application.
Indeed, the move comes at a time when there is increasing skepticism that the SEC will approve Ethereum spot ETF.
This had been a promising prospect after the SEC had given approval for Bitcoin spot ETFs back in January.
The launch of this investment product had led to a bull run for Bitcoin and it had managed to reach a new all-time high price in March.
The odds of an Ethereum spot ETF getting approved have continued to decline, with hopes plummeting after it was revealed that the SEC had internally classified Ethereum as a security.