Grayscale withdraws its Ethereum ETF application, sparking heated discussions in the market; another setback on the eve of the SEC decision

Brief Overview:

•Grayscale abruptly withdrew its Ethereum futures ETF application.

•The withdrawal came weeks before the SEC’s decision.

•The decision has sparked speculation about Grayscale’s future strategy.

Grayscale Investments, the US-based cryptocurrency asset management giant, recently announced a surprising move by withdrawing its application for an Ethereum (ETH) futures exchange-traded fund (ETF).

The decision comes just weeks before a mandatory ruling from the securities regulator, which has also sparked considerable discussion in the financial and crypto communities.

Understanding the reasons behind Grayscale's withdrawal of its ETF application

Grayscale filed a notice of application to withdraw its Ethereum Futures Trust with the U.S. Securities and Exchange Commission (SEC) on May 7, 2024. The application was originally filed on September 19, 2023 with the intention of listing on the New York Stock Exchange (NYSE).

The unexpected decision sparked speculation about possible secret talks between Grayscale and the SEC. While the exact reason for the withdrawal is unclear, James Seyffart, an ETF analyst at Bloomberg Intelligence, speculated that the move could be strategic.

Seyffart speculated: “This is quite interesting... I personally think that the application for the Ethereum futures ETF is essentially a strategic layout to recreate the situation that Grayscale won in the GBTC lawsuit, that is, approving futures trading and rejecting spot trading. To be honest, I don’t really understand why they did this. In my opinion, Grayscale should let the SEC give a clear approval or rejection of the application for the ETH futures ETF before deciding on the next step. Perhaps the SEC has already communicated with Grayscale on this matter... Maybe some statement or opinion of the SEC convinced Grayscale to withdraw the application?”

There has also been speculation from members of the cryptocurrency community that Grayscale may have withdrawn its application due to the high likelihood that the SEC will approve a spot Ethereum ETF on May 23.

However, Seyffart denied this with humor.

He explained: “Haha, I don’t really believe that the SEC will approve the spot Ethereum ETF on May 23 (of course it’s not completely impossible). Therefore, I think Grayscale should have other reasons to withdraw its application. To be honest, if I were Grayscale, this would be one of the very few reasons why I would voluntarily withdraw my application.”

Despite the increasing recognition of cryptocurrency as a viable investment asset, the likelihood of the U.S. Securities and Exchange Commission (SEC) approving a spot Ethereum ETF is still viewed with pessimism. Analysts like Seyffart and Eric Balchunas, as well as industry figures like Jan van Eck and MicroStrategy’s Michael Saylor, share this pessimistic view.

The SEC’s recent decision to delay its review of Galaxy Invesco’s Ethereum ETF application reinforced this pessimistic sentiment in the market.

It is reported that the additional 60-day delay will extend market uncertainty until at least July 5.

Despite the uncertainty, market participants are eagerly awaiting the SEC’s decisions on the spot Ethereum ETF applications filed by VanEck and ARK, which are scheduled for May 23 and May 24, respectively. #Grayscale #以太坊ETF