Grayscale's proposal to list exchange-traded funds (ETFs) tied to the price of ether was recently withdrawn, according to a notice from the Securities and Exchange Commission (SEC). NYSE Arca, Grayscale's ETF that would have been listed if approved, withdrew the proposal ahead of an expected decision by the regulator on similar requests by asset managers VanEck, ARK Investments/21Shares and others.
Ethereum ETF faces scrutiny
This decision has raised concerns among asset managers, who expect the SEC will likely reject their applications after meetings with the regulator, Reuters reported. Several investment managers launched futures-based ETFs tied to the value of ether in October last year, marking a major milestone in the US cryptocurrency investment sector.
Grayscale entered the fray by filing for an ETF in September, expecting to capitalize on growing demand for cryptocurrency investment products. However, the outcome of the SEC's deliberations is uncertain after the SEC postponed its decision.
In addition, Grayscale's proposal to convert the existing Grayscale Ethereum Trust into a spot ETF is pending approval. The company asserts that the SEC's approval of Ethereum futures ETFs sets a precedent for the approval of ETFs tied to the spot price of cryptocurrencies, given the intrinsic relationship between futures and spot markets. However, the withdrawal of the company's ETF futures application highlights regulatory hurdles.
Challenges facing cryptocurrency investment companies
The withdrawal of Grayscale's Ethereum Futures ETF proposal reflects the ongoing regulatory challenges facing cryptocurrency investment firms. While the SEC's decision on Grayscale's spot Ether ETF application is still pending, the broader implications extend to investors navigating the evolving cryptocurrency market.
In March, Grayscale filed to list a new “mini” version of its exchange-traded fund (ETF) Grayscale Bitcoin Trust (GBTC), Finance Magnates reported. The move aims to provide investors with tax-free exposure to Bitcoin, representing a strategic expansion of Grayscale's offerings in the cryptocurrency investment space.
If approved, the fund, which operates under the ticker symbol “BTC,” will be listed on the NYSE as a separate entity from Grayscale’s underlying GBTC fund. As part of the arrangement, shares of the new Bitcoin Fund will be distributed to existing GBTC shareholders, with GBTC contributing an undisclosed amount of Bitcoin to the fund. The announcement came amid a surge in Bitcoin prices, reaching a new all-time high of $71,415 on March 11.
This article was written by Jared Kirroy at www.financemagnates.com.
