Why did Grayscale withdraw its Ethereum futures ETF application on the eve of SEC approval?

24-05-08 16:32

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Original title: "What is Grayscale's intention to withdraw its Ethereum futures ETF application on the eve of SEC approval?"

Original source: 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 explaining that the SEC has postponed its application documents several times since its first submission on September 19, 2023. The regulator claimed 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 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 approval results for futures and spot). 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.

So James Seyffart is puzzled as to why Grayscale is withdrawing 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, while the final deadlines for ARK 21Shares and Hashdex are May 24 and May 30).

"In my opinion, it would be better to let the SEC approve or reject the ETH futures ETF first, and then start from there? Maybe the SEC and Grayscale have discussed this matter and persuaded Grayscale to withdraw voluntarily? (Totally speculative)." James Seyffart added.

Of course, some people speculate that Grayscale may aim to increase the chances of spot ETF approval. Because the SEC may choose to approve the Ethereum futures ETF and reject the Ethereum spot ETF.

Seffart did not rule out the possibility that Grayscale would resubmit a revised application, which would reduce the workload of the SEC, but would also lose the opportunity for litigation.

"Withdrawing and resubmitting the application would reduce the workload for the SEC, but it also means that Grayscale or anyone else cannot file 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 think it's because of something else. But having said that, if I were Grayscale, this would indeed be one of the very few reasons why 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 Ethereum spot ETF is a problem currently facing our committee. We are a five-member committee and these documents will be processed in due course."

Recently, analysts including JPMorgan Chase, Standard Chartered Bank and Bloomberg have all believed that the spot Ethereum 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.