Grayscale Withdraws Ethereum Futures ETF Application Amid SEC Delays

Grayscale Withdraws Ethereum Futures ETF Application Amid SEC Delays

Grayscale, a prominent crypto asset manager, has decided to withdraw its rule change application for an Ethereum futures exchange-traded fund (ETF) from the Securities and Exchange Commission (SEC). The move comes after multiple delays by the federal regulator since the initial filing in September 2023.

The notice of withdrawal, submitted on Tuesday, did not provide specific reasons for Grayscale’s decision to abandon its plan for the Grayscale Ethereum Futures Trust ETF. The SEC had previously delayed the review process on several occasions, with the most recent delay occurring on March 22.

Bloomberg analyst James Seyffart characterized the withdrawal as “interesting,” suggesting that the filing may have been a strategic move by Grayscale to create circumstances similar to its successful lawsuit against the SEC over its Bitcoin trust (GBTC).

In August, a federal appeals court ruled in favor of Grayscale after the firm accused the SEC of approving Bitcoin futures ETFs while denying Bitcoin spot ETFs. Seyffart speculated that Grayscale may have wanted the SEC to “approve futures, deny spot” again, potentially setting the stage for another legal battle.

However, Seyffart noted that the withdrawal could indicate that Grayscale is not pursuing a lawsuit this time around. He also mentioned the possibility of Grayscale re-filing an amended application, which would be less work for the SEC but would forego the opportunity for a legal challenge.

The decision to withdraw the application comes amid increasing skepticism about the SEC’s willingness to approve Ethereum spot ETFs. Despite the agency’s approval of Bitcoin spot ETFs in January, the prospects for Ethereum spot ETFs have continued to dwindle. Recent reports suggest that the SEC classified Ethereum as a regulated security last year, contradicting previous statements indicating that no decision had been made.

Overall, Grayscale’s withdrawal of the Ethereum futures ETF application reflects the ongoing challenges and uncertainties surrounding the regulatory landscape for crypto assets in the United States. Investors and industry observers will be closely monitoring any future developments in this space.