Grayscale’s proposal to list exchange-traded funds
(ETF) tied to the price of Ethereum was recently withdrawn, according to a notice by the
Securities and Exchange Commission (SEC). NYSE Arca, the platform Grayscale’s ETF
would have been listed if approved, withdrew the proposal ahead of an
anticipated decision by the regulator on similar applications by asset managers
VanEck, ARK Investments/21Shares, and others.
Ethereum ETFs Faces Scrutiny
This decision has raised concerns among these asset
managers, who anticipate the SEC will likely decline similar applications following
meetings with the regulator, Reuters reported. In October, several investment
managers debuted futures-based ETFs linked to the value of Ethereum, marking a
significant milestone in the US crypto investment sector.
Grayscale entered the fray by filing its ETF
application in September, anticipating to capitalize on the expanding demand
for crypto investment products. However, the outcome of the SEC’s deliberation
is uncertain after the SEC delayed its decision.
Additionally, Grayscale’s bid to convert its existing Grayscale
Ethereum Trust into a spot Ether ETF is pending approval. The firm contends that the SEC’s approval of ether futures ETFs sets a precedent for approving ETFs tied to the
cryptocurrency’s spot price, given the intrinsic relationship between futures
and spot markets. However, the withdrawal of its Ethereum futures ETF
application underscores the regulatory hurdles.
Challenges Facing Crypto Investment Firms
The withdrawal of Grayscale’s Ethereum futures ETF
proposal reflects the ongoing regulatory challenges facing crypto investment
firms. While the SEC’s decision on Grayscale’s spot Ether ETF application
remains pending, the broader implications extend to investors navigating the
evolving crypto market.
In March, Grayscale filed an application to list a new
“mini” version of its Grayscale Bitcoin Trust (GBTC) exchange-traded
fund (ETF), Finance Magnates reported. This move aims to provide investors with tax-free exposure to
Bitcoin, marking a strategic expansion of Grayscale’s offerings in the
cryptocurrency investment space.
If approved, the trust, operating under the ticker
symbol “BTC,” will be listed on the New York Stock Exchange as an
independent entity from Grayscale’s primary GBTC fund. As part of the
arrangement, shares of the new Bitcoin trust will be distributed to existing
GBTC shareholders, with GBTC contributing an undisclosed amount of Bitcoin to
the…
