Leading crypto asset manager Grayscale has announced the withdrawal of its plan to introduce an exchange-traded fund (ETF) for Ethereum futures, retracting its rule change application submitted to the Securities and Exchange Commission (SEC) on Tuesday.
The decision to withdraw the proposed Grayscale Ethereum Futures Trust ETF follows a series of delays initiated by the SEC since the application’s initial filing on September 19, 2023. Despite multiple extensions granted by the federal regulator for review, including those on November 15, December 18, and March 22 of this year, Grayscale has opted to terminate the application without specifying the rationale behind the decision.
James Seyffart, an ETF analyst for Bloomberg, characterized the move as intriguing, suggesting it was a strategic maneuver by Grayscale. He speculated that Grayscale may have intended to replicate the circumstances that enabled it to prevail in a previous legal dispute with the SEC regarding Bitcoin futures ETFs.
The federal appeals court had ruled in favor of Grayscale in August, following a lawsuit challenging the SEC’s disparate treatment of Bitcoin futures ETFs and spot ETFs. Grayscale’s strategy, according to Seyffart, may have aimed to provoke the SEC into a similar “approve futures, deny spot” scenario, potentially leading to another legal confrontation.
However, Seyffart expressed doubt regarding this theory, noting that Grayscale’s withdrawal may indicate a departure from pursuing litigation. He acknowledged the possibility of Grayscale revising and resubmitting its ETF application but highlighted the implications of withdrawing the current application, including the inability to pursue legal action against the SEC.
Amid speculation surrounding the SEC’s stance on Ethereum spot ETFs, Seyffart dismissed suggestions that Grayscale withdrew its application due to imminent approval of such ETFs. He emphasized ongoing skepticism regarding the authorization of Ethereum spot ETFs, particularly following reports alleging the SEC’s classification of Ethereum as a regulated security last year, contradicting prior public statements.