In a recent development, Grayscale Investments has submitted a fresh application for the creation of an Ethereum Futures Exchange-Traded Fund (ETF). This marks the company’s second attempt to gain approval for such an ETF, and it comes with distinct regulatory strategies aimed at improving the chances of success.
This strategic move aligns the application with the regulatory framework commonly used for reporting commodities and Bitcoin ETFs. What adds intrigue to the situation is that five other companies have also chosen this regulatory path for their Ethereum Futures ETF applications. The motivation behind this dual-application strategy remains somewhat mysterious, but one interpretation is that it aims to enhance the likelihood of approval.
Recent developments suggest that the U.S. Securities and Exchange Commission (SEC) is actively reviewing these applications, with potential approvals as early as October. Grayscale’s application is just one of six currently under evaluation by the SEC.
Grayscale’s Progress with a Bitcoin ETF: A Game-Changer?
Grayscale’s recent legal victory against the SEC adds an intriguing layer to the unfolding story. After the denial of their application to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot ETF in June 2022, Grayscale did not back down. In August 2023, a court ruled that the SEC should reevaluate Grayscale’s application, emphasizing the need for a more thoughtful decision-making process. This decision did not sit well with Grayscale executives. This turn of events could play a pivotal role in the company’s pursuit of an Ethereum Futures ETF.
Elliott Z. Stein, a senior litigation analyst at Bloomberg Intelligence, holds an optimistic view of Grayscale’s prospects. He believes that Grayscale has a 70% chance of prevailing in its ongoing lawsuit against the SEC. Stein anticipates that the SEC may feel compelled to approve Grayscale’s ETF request before the court delivers its decision in August 2023. This is particularly significant as it aligns with the pending decision on Ark Investment Management’s ETF.
SEC Scrutiny: A Growing Challenge for Cryptocurrency ETFs
While Grayscale’s actions and the SEC’s responses are in the spotlight, it’s crucial to acknowledge the increasing scrutiny faced by cryptocurrency ETF applications. The SEC’s concerns regarding compliance with the law, especially regarding the fragmented and unregulated nature of Bitcoin spot markets, are central to these debates. This underscores the significant hurdles that cryptocurrency ETF applicants must overcome to meet regulatory standards.
As Grayscale continues to navigate this complex regulatory landscape and pushes forward with its Ethereum Futures ETF application, the cryptocurrency community remains closely attuned to these developments. The potential approval of an Ethereum Futures ETF could represent a significant milestone, opening the door to broader and more accessible investment opportunities in Ethereum futures, and ultimately reshaping the cryptocurrency investment landscape. Bitwise, Roundhill, ProShares Short, and VanEck are among the other firms seeking Ethereum ETF approvals.