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Grayscale’s second attempt at an Ethereum Futures ETF, following a recent legal win, has generated optimism in the crypto community.
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Grayscale Investments has made a fresh application for an Ethereum Futures Exchange-Traded Fund (ETF), marking its second attempt, with unique regulatory strategies in play to increase approval odds.
This move aligns with the regulatory framework typically used for commodities and Bitcoin ETFs. Interestingly, five other companies have chosen the same regulatory approach for their Ethereum Futures ETF applications. While the motive behind this dual-application strategy isn’t entirely clear, it could be aimed at enhancing approval prospects.
Recent indications 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 one of six currently under SEC evaluation.
Is Grayscale’s Bitcoin ETF Progress a Game Changer?
Grayscale’s recent legal win against the SEC adds an intriguing twist to the story. After their application to convert the Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot ETF was denied in June 2022, Grayscale persisted. In August 2023, a court ruled that the SEC should reevaluate Grayscale’s application, emphasizing the need for a more thoughtful decision-making process—a decision that didn’t sit well with Grayscale executives. This turn of events could play a pivotal role in their pursuit of an Ethereum Futures ETF.
Elliott Z. Stein, a senior litigation analyst at Bloomberg Intelligence, holds an optimistic view of Grayscale’s chances. He believes Grayscale has a 70% chance of winning its ongoing lawsuit against the SEC. Stein anticipates the SEC may feel compelled to approve Grayscale’s ETF request before the court’s decision arrives in August 2023. This is especially significant given the pending decision on Ark Investment Management’s ETF.
The Increasing Challenges for Cryptocurrency ETFs and Grayscale’s Role
The growing interest in cryptocurrency ETFs and Grayscale’s pursuit of approval have led to more regulatory scrutiny. The SEC is concerned about ensuring compliance with the law, especially given the fragmented and unregulated nature of Bitcoin spot markets. This makes it challenging for cryptocurrency ETF applicants to meet regulatory standards.
As Grayscale continues its efforts to gain approval for an Ethereum Futures ETF, the cryptocurrency community is closely watching these developments. If an Ethereum Futures ETF gets approved, it could open up new investment opportunities in Ethereum futures and transform the cryptocurrency investment landscape. Other companies like Bitwise, Roundhill, ProShares Short, and VanEck are also seeking approval for Ethereum ETFs.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.