The United States (US) Securities and Exchange Commission (SEC) has announced an extension of its evaluation period for Grayscale’s Ethereum Futures Trust, effectively pushing the final decision deadline to 1 January 2024.
The SEC’s filing outlines a clear path of either approving or disapproving the proposed rule change or initiating proceedings to assess the proposal’s viability.
This extension grants the SEC additional time for a comprehensive review.
In October, Grayscale sought the conversion of its Ethereum Trust into an Exchange-Traded Fund (ETF), a move highlighted by Michael Sonnenshein, Grayscale’s CEO, as pivotal for closer integration of Ethereum into US regulatory frameworks.
In August, Grayscale secured a legal victory concerning its Bitcoin Trust (GBTC), prompting the SEC to reconsider a prior denial for its ETF conversion.
While not a direct approval, this legal milestone challenged the SEC’s initial refusal, deemed inconsistent with the approval of bitcoin futures ETFs.
The SEC’s delay in Grayscale’s Ethereum ETF decision holds broader implications beyond a single firm’s product evolution.
It reflects the evolving dynamics of both regulatory and market forces in the realm of cryptocurrency investments.
Bloomberg ETF analyst James Seyffart suggests that Grayscale is strategically employing its Ether futures ETF application as a “trojan horse” to influence the SEC’s approval stance on its spot Ether ETF.
Both James and Scott Johnsson, General President at Van Buren Capital General, share a consensus that Grayscale is unlikely to launch the Ether futures ETF.
James’ remarks coincide with the SEC’s decision to postpone its verdict on Grayscale’s Ether futures ETF, a move occurring two days before the initial 17 November deadline.
He expressed minimal surprise at the delay, signalling an expectation aligned with the SEC’s procedural timeline.
On a parallel note, Hashdex’s application to transform its Bitcoin futures ETF into a spot product faced a similar pause by the securities regulator on 15 November.
If the SEC approves the futures ETF, Grayscale could argue for the approval of its spot Ether ETF application.
Conversely, a denial could lead to arguments of disparate treatment of Bitcoin and Ether futures ETFs.
The SEC’s postponement decision on Grayscale’s Ethereum ETF is occurring amidst a wider backdrop of regulatory discussions around cryptocurrency investments, including BlackRock’s assertion that there is no legitimate reason to treat cryptocurrency spot and futures ETF applications differently.