Grayscale Investments, the largest cryptocurrency asset manager in the world, has decided to withdraw its application for an Ether futures exchange-traded fund (ETF) just three weeks before the US Securities and Exchange Commission (SEC) was scheduled to make a decision on several spot ETH ETFs.
The withdrawal notice for the Grayscale Ethereum Futures Trust was submitted on May 7th, catching many analysts off guard. The application, which was filed in September 2023, proposed an ETF that would monitor Ether futures contracts on the Chicago Mercantile Exchange (CME) and would have been listed on the New York Stock Exchange if approved.
There have been speculations that Grayscale may have used the futures ETF as a strategic tool. Bloomberg ETF analyst James Seyffart suggested that it could have been a “Trojan horse” to put pressure on the SEC to approve a spot Ether ETF, which directly tracks the price of Ethereum itself.
However, Seyffart’s confusion reflects the overall sentiment in the market. The withdrawal comes just before the SEC’s upcoming deadlines to decide on spot Ether ETF applications from other companies, including VanEck (May 23rd), ARK 21Shares (May 24th), and Hashdex (May 30th).
Recently, the SEC announced a delay in its decision on the Invesco Galaxy spot Ethereum ETF, pushing the next deadline to July 5, 2024.
Analysts are not optimistic about the approval of an ETH ETF. In a recent interview with CNBC, SEC Chair Gary Gensler acknowledged the applications but did not provide a specific timeline for a decision. He stated, “That’s something in front of our Commission right now. We’re a five-member Commission, and those filings will be taken up at the appropriate time.”
Grayscale’s withdrawal adds uncertainty to the fate of spot Ethereum ETFs. While applications from Invesco Galaxy, BlackRock, and Fidelity are expected in the coming months, industry experts anticipate a similar approach from the SEC, similar to its handling of spot Bitcoin ETFs in January 2023.
Bloomberg analyst James Seyffart has expressed doubt, suggesting that the current round of Ethereum ETF applications may ultimately be denied.
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