Grayscale has amended a regulatory filing through which it intends to convert its Ethereum Trust into the Grayscale Ethereum ETF Spot.
Grayscale Ethereum ETF
The company's revision strengthens its previous proposal in several ways. This update supports the thesis that shared custody in CME's $ETH market is sufficient to combat fraud and manipulation.
Grayscale's latest amendment includes a correlation analysis performed by Coinbase. It serves as evidence of market correlation. Coinbase found that CME's ETH futures market has been “continuously and highly correlated” with the Ethereum market. This has been going on for about the past 3 years.
This ratio is higher than the correlation the SEC found between the CME Bitcoin futures market and the Bitcoin market.
Expanding Creation and Refund Methods
Grayscale's amendments also expand on the creation and redemption of ETF shares. Notably, this section only describes cash generation and redemption. Accordingly, authorized partners cannot purchase, hold, deliver or receive ETH.
According to the report, the Grayscale Ethereum Foundation currently holds $11.8 billion in assets under management (AUM). Converting the fund to an ETF will release more than $1.73 billion in value instead of the previous estimate of $1.6 billion.
Grayscale Always Supports ETFs
Grayscale Chief Legal Officer Craig Salm highlighted the expected appeal of an Ethereum ETF. He wrote on X that investors “want and deserve access to Ethereum as an ETF.
Salm argues that an Ethereum ETF “as powerful as a Bitcoin ETF” would create tremendous growth.
Market manipulation and creation/redemption methods were the main concerns before the Bitcoin ETF was approved this January. Grayscale's latest amendment is important because it deals with similar problems of the Ethereum ETF.
Grayscale's revisions come alongside reduced expectations for regulatory approvals. Polymarket puts the odds for an Ethereum ETF approval by the end of May at just 26%.