Crypto assets manager Grayscale Investments is the latest firm to file for a new exchange-traded fund (ETF) that tracks ether futures.
The filing comes just a few weeks after Grayscale notched a bombshell legal victory against the U.S. Securities and Exchange Commission in its quest to convert its Bitcoin Trust (GBTC) into an ETF.
Grayscale’s Ethereum Futures ETF Filing
Grayscale Investments is attempting to gain approval from the SEC for an Ethereum futures ETF.
Grayscale proposed to list and trade shares of the Grayscale Ethereum Futures Trust (ETH) ETF under the New York Stock Exchange (NYSE) Arca Rule 8.200-E in a Tuesday filing. It’s worth mentioning that the fund, if approved by the SEC, would “not transact in Ether and will not be required to retain an Ether custodian” and instead would deal exclusively in futures.
The proposal, according to the Wall Street Journal, is pursuant to the Securities Act of 1933 — the regulation overseeing commodities and spot Bitcoin ETFs.
Notably, Grayscale had previously filed for another Ethereum futures ETF under the Investment Company Act of 1940, the framework under which most securities-based ETFs are registered. The WSJ observed that the contrast is remarkable in that the SEC has previously given the go-ahead to Bitcoin futures ETFs registered under both acts.
The ether financial vehicle would be managed by Grayscale Advisors, also termed as the “sponsor” in the application.
“The Sponsor is in the process of becoming registered as a commodity pool operator with the Commodity Futures Trading Commission and is in the process of becoming a member of the National Futures Association,” the filing reads.
Moreover, Grayscale Advisors have engaged Videnct Advisory as a subadviser, to act as the products commodity trading adviser.
Long Journey
Grayscale Investments, the manager behind the world’s biggest crypto fund, first filed paperwork for its GBTC to be transformed into an exchange-traded fund in October 2021. The SEC blocked the application in June 2022, stating in its decision that the filing failed to answer the agency’s questions about curbing market manipulation, as well as other concerns.
Grayscale then appealed the SEC’s decision barely an hour after the regulator disapproved its application. The firm’s favourable ruling was unveiled in August, a few months after a flurry of traditional finance juggernauts such as BlackRock and Fidelity filed applications for spot bitcoin ETFs.
The SEC first green-lighted a Bitcoin futures ETF back in 2021. But it’s been dragging its feet in approving a spot crypto product. While US investors wait for a spot Bitcoin ETF, which would catalyze further institutional adoption of BTC, ether futures ETFs might hit the market first.
