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US SEC Report on Grayscale Withdrawal
The recent withdrawal of a critical filing by Grayscale has caught the attention of the US Securities and Exchange Commission (SEC), potentially impacting spot Ethereum Exchange-Traded Funds (ETFs) in a significant manner. The withdrawal was made by NYSE Arca, pulling back a 19-b4 filing that included a proposed rule change to list and trade shares of Grayscale’s Ethereum Futures Trust ETF.
Implications for Spot Bitcoin ETF
Although Grayscale’s pending futures Ethereum ETF is not directly linked to its more prominent effort to convert the Grayscale Ethereum Trust (ETHE) into a spot ETF, the two filings are intertwined. Van Buren Capital GP Scott Johnson highlighted that the submission of the futures Ethereum ETF application was aimed at forcing the SEC to produce a 19b-4 order that would document its analysis of futures-based ETFs, particularly as the deadline for the ETH spot ETF approached later in the month.
Johnson expressed his puzzlement over the withdrawal, underlining that an order would not necessarily mandate the approval of similar funds. He suggested that Grayscale should be keen on obtaining the 19-b4 order as it could be beneficial in the process.
Trojan Horse Strategy
Bloomberg ETF analyst James Seyffart characterized the proposed rule change as a “trojan horse filing” that potentially could have set the stage for Grayscale to take legal action against the SEC in case of disapproval. Seyffart also mentioned his bafflement over the situation, pointing out that the SEC could have outright denied the proposal. He speculated that potential discussions between the SEC and Grayscale might have led to the withdrawal, although noting that his explanation is mere conjecture.
Seyffart further elaborated that the withdrawal, while potentially placating the SEC, could restrict the options available for Grayscale and others to challenge regulatory decisions in the future.
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