Why did Grayscale withdraw its Ethereum futures ETF application on the eve of SEC approval?
Original author: Felix, PANews
On May 7, Grayscale Investments, the world's largest crypto asset management company, withdrew its Ethereum futures ETF application submitted to the U.S. Securities and Exchange Commission (SEC).
But Grayscale did not explain the reason for the move, only citing the SEC's multiple delays in its application since its initial submission on September 19, 2023, with the regulator claiming on November 15 last year, December 18 and March 22 this year that it needed more time to review the proposal.
Grayscale's decision has sparked a lot of speculation.
James Seyffart, senior ETF analyst at Bloomberg, believes that the EFT application may just be a strategic move, using its Ethereum futures ETF as a "Trojan Horse" to create a situation similar to Grayscale's win in the GBTC lawsuit (different results for futures and spot approvals). Last August, the U.S. Federal Court of Appeals sided with Grayscale in a lawsuit against the SEC, accusing the SEC of approving a Bitcoin futures ETF while rejecting a Bitcoin spot ETF.
Therefore, James Seyffart wondered why Grayscale withdrew now, because the SEC must make a decision on May 23 to approve or reject at least one spot Ethereum ETF application (Note: The SEC must make a decision on VanEck’s application by May 23, and the final deadlines for ARK 21 Shares and Hashdex are May 24 and May 30).
“It seems to me that it would be better to let the SEC approve or reject the ETH futures ETF first and then start from there? Maybe the SEC discussed this with Grayscale and convinced Grayscale to withdraw voluntarily? (Totally speculation)” James Seyffart added.
Of course, some people speculate that Grayscale may be aiming to increase the chances of spot ETF approval, because the SEC may choose to approve the Ethereum futures ETF while rejecting the Ethereum spot ETF.
Seffart did not rule out the possibility that Grayscale could resubmit an amended application, a move that would reduce the SEC’s workload but also eliminate the chance of a lawsuit.
“Withdrawing and resubmitting the application will reduce workload for the SEC, but it also means that Grayscale or anyone else cannot bring a lawsuit now.”
In addition, in the comments of X's tweet, some crypto people believed that Grayscale withdrew its application because the SEC would approve the Ethereum spot ETF, but Seyffart disagreed.
“I don’t think this will happen (although the possibility is not zero), so I assume it’s because of something else. That being said, if I were Grayscale, this would indeed be one of the very few reasons I would voluntarily withdraw this application.”
It is worth noting that SEC Chairman Gary Gensler said in an interview with CNBC on May 7 that the SEC is still weighing its decision on the Ethereum spot ETF and once again emphasized the problem of fraud in the crypto market.
“The issue of an Ethereum spot ETF is an issue that our committee is currently facing. We are a five-member committee and those documents will be dealt with in due course.”
Recently, analysts including JPMorgan Chase, Standard Chartered Bank and Bloomberg have all believed that the Ethereum spot ETF application is unlikely to be approved in May. Grayscale's withdrawal of the application may further reduce the possibility of Ethereum spot ETF being approved in May.
