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Grayscale Withdraws Ether Futures ETF Application Before SEC Decision

Grayscale Investments, the leading cryptocurrency asset manager, has pulled back its application for an Ether futures exchange-traded fund (ETF) a mere three weeks before the anticipated ruling by the US Securities and Exchange Commission (SEC) on several spot ETH ETFs.

The announcement of withdrawal for the Grayscale Ethereum Futures Trust came on May 7th, catching analysts off guard as they seek to comprehend the sudden change. Initially filed in September 2023, the application outlined an ETF designed to mirror Ether futures contracts traded on the Chicago Mercantile Exchange (CME). Had it gained approval, the ETF would have been listed on the New York Stock Exchange.

Grayscale Using Ether Futures ETF as a Strategic Tool?

Bloomberg ETF analyst James Seyffart previously speculated that Grayscale might have been leveraging the futures ETF as a strategic maneuver. He posited it could serve as a “Trojan horse,” exerting pressure on the SEC to greenlight a spot Ether ETF – a product that directly mirrors Ethereum’s price.

Yet, Seyffart’s perplexity echoed the broader market sentiment. The withdrawal arrives just weeks before the SEC faces deadlines to rule on several spot Ether ETF applications from other firms, including VanEck (due May 23rd), ARK 21Shares (due May 24th), and Hashdex (due May 30th).

Earlier this week, the SEC announced a postponement in its decision concerning the Invesco Galaxy spot Ethereum ETF, pushing the next deadline to July 5, 2024.

Analysts Not Hopeful for ETH ETF Approval

The SEC’s stance on spot Ether ETFs remains uncertain. In a recent CNBC interview, SEC Chair Gary Gensler acknowledged the applications but provided no specific timeline for a decision. “That’s something in front of our Commission right now,” he stated. “We’re a five-member Commission, and those filings will be taken up at the appropriate time.”

Grayscale’s withdrawal leaves the destiny of spot Ethereum ETFs in limbo. While applications from Invesco Galaxy, BlackRock, and Fidelity are anticipated in the coming months, industry experts foresee a similar collective decision-making process from the SEC, akin to its approach with spot Bitcoin ETFs in January 2023.

Bloomberg analyst James Seyffart has voiced skepticism, suggesting that the current wave of Ethereum ETF applications might ultimately face denial.

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