Leading cryptocurrency asset management company, Grayscale, has officially withdrawn its application for a futures Ethereum exchange-traded fund (ETF). Grayscale registered with the Securities and Exchange Commission (SEC) on September 23, 2023, but has decided to pull its application. While the company has not provided specific reasons for the withdrawal, it may be related to recent delays and rejections of SEC decisions regarding digital currencies. These include a rejection on November 15, a decline on December 18, and a postponed decision on March 22.
Grayscale’s decision to withdraw the ETH ETF from the market marks a significant shift in the company’s position. One notable case involving the SEC is the ruling last year in favor of Grayscale against its Bitcoin futures ETF, despite the SEC approving Bitcoin futures providers as a source of crypto delivery during market volatility.
EFT analyst James Seyffart suggests that Grayscale’s application may have been a strategic move to replicate its previous victory over the SEC. By seeking approval for an Ethereum futures ETF while denying them an Ethereum spot ETF, Grayscale may have wanted to provoke a confrontation. Alternatively, the withdrawal could be a precautionary measure to avoid potential litigation.
Speculations about the reasons behind Grayscale’s withdrawal have been fueled on social media, with some suggesting that the SEC’s potential regulation of reverse spot ETFs may be a factor. However, Seyffart dismisses this claim, deeming it unlikely. The judge has acknowledged Grayscale’s strategic legal moves, but the re-filing of the application could be a more cautious approach by the SEC to address legal concerns from Grayscale and other parties.
Despite increased scrutiny and skepticism from analysts, the SEC’s approval of Bitcoin spot ETFs has generated optimism for Ethereum spot ETFs. This could indicate potential growth in the price of Bitcoin and positive trends in the crypto market.
There is a growing possibility that Ethereum spot ETFs may face regulatory obstacles. Last year, the SEC rejected them based on the belief that Ethereum was a regulated security, contradicting an earlier statement from the SEC that there were no plans to regulate Ethereum.
