Withdrawal of Grayscale’s Ethereum Futures ETF Application Leaves Analysts Puzzled

The recent withdrawal of an application for an Ethereum futures exchange traded fund by Grayscale Investments has left analysts puzzled. The application, which was filed with the Securities and Exchange Commission (SEC) and would have allowed the fund to trade on the NYSE Arca Inc. exchange, was withdrawn on May 3, according to a recent SEC filing.

The original application was filed on Sept. 19, 2023, and the SEC had delayed making a decision on it twice, most recently on March 22. Bloomberg ETF analyst James Seyffart expressed confusion over the withdrawal, stating on Twitter, “Idk why they’d do this honestly.”

While spot Ethereum ETF applications are unlikely to be approved soon, nine Ethereum futures ETFs are already trading, with the SEC approving several last October. However, these funds have not seen the same level of success as the first spot bitcoin ETFs, which have accumulated significant assets since receiving SEC approval in January.

Some analysts speculate that the withdrawal of the Ethereum futures ETF application could impact the push for a spot Ethereum ETF approval. Grayscale’s previous legal victory against the SEC in converting the Grayscale Bitcoin Trust (GBTC) into an ETF could have been used as leverage for an Ethereum futures ETF approval. However, with the withdrawal of the application, this strategy may be less likely.

The Grayscale Bitcoin Trust ETF (GBTC) currently holds $18 billion in assets, despite experiencing losses. The fund carries a 1.5% fee, the highest among spot bitcoin ETFs.

For more information on this developing story, contact Lucy Brewster at lucy.brewster@etf.com.