Grayscale withdrew their Ethereum futures ETF application as a possible way to avoid litigation and comply with SEC regulations.
Despite the withdrawal, Ethereum’s market responded to regulatory news in a variety of ways, including a slight decline and a weekly gain.
Leading digital currency investment company Grayscale recently took a big step forward by dropping its application for an Ethereum futures ETF that it had first submitted to the SEC in September 2023.
James Seyffart, senior analyst at Bloomberg, sees this pullout as a calculated move, a “Trojan horse” intended to replicate the conditions that enabled Grayscale to prevail in the GBTC litigation.
Seyffart’s perplexity with the reasoning behind this ruling reflected a wider lack of clarity in the financial sector, implying that Grayscale may have been advocating for a position from which they might contest the SEC’s rulings on Bitcoin exchange-traded funds.
The Impact of the SEC and Grayscale’s Estimated Withdrawal
There is speculation that discussions between Grayscale and the SEC may have been crucial in this pullout. Seyffart brought up the idea that the SEC had an impact on Grayscale’s decision, which caused them to rethink their approach.
This action could be seen as Grayscale’s calculated strategic retreat from court battles to a more cooperative and compliant stance with regard to upcoming bitcoin ETF applications.
Amidst that, the market price of ETH saw a minor decline, falling 1.75% in the previous day to close at $3,017.29. This week’s slight 1.91% increase contrasts with the short-term move.
Comparing This Proposal with Other ETFs
The cryptocurrency industry is also keeping an eye on the SEC’s tardy decision regarding Galaxy Invesco’s identical proposal for an Ethereum spot ETF; the decision deadline has been rescheduled for July 5, as formerly reported by ETHNews.
In light of Grayscale’s withdrawal and this delay, the SEC may be taking a more cautious stance toward Ethereum ETFs, which would be consistent with its past practice of closely monitoring cryptocurrency-related products.
Also, another senior ETF analyst at Bloomberg, Eric Balchunas, believes that Grayscale’s choice to back out of the litigation might be seen favorably. This could signal a change in Grayscale’s strategy to sidestep legal disputes and possibly bank on a more favorable regulatory landscape soon.
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