Grayscale is persisting in its efforts to launch a spot Ethereum exchange-traded fund (ETF), with a new amended filing with the SEC. The company’s amended proposal cites the precedent set by Ethereum futures ETFs and the effectiveness of monitoring mechanisms. However, the chances of approval remain slim, as two US senators urge regulators to halt the approval of other cryptocurrency ETFs.
In a recent CNF video on YouTube, analysts discuss the growing global presence of BTC ETFs and consider the possible involvement of central banks, although likely as a late entrant. Speculation centers on the timing of spot Ether ETF approvals, with expectations growing for an international launch before domestic approval.
Despite the regulatory uncertainty surrounding Ethereum spot exchange-traded funds (ETFs), leading crypto asset management firm Grayscale continues to pursue this investment product.
The company modified its proposal to convert its Ethereum Trust into a spot Ethereum ETF that would be listed and traded on the NYSE Arca.
Grayscale Amends Its Ethereum ETF Proposal
Grayscale argued that since the US Securities and Exchange Commission (SEC) had already approved Ethereum futures ETFs, it should also sanction ETFs that offer direct spot Ethereum exposure.
The company stated that the surveillance carried out by the Chicago Mercantile Exchange (CME) on the Ethereum market is sufficient to prevent fraud and manipulation. Furthermore, he supported his argument by referring to Coinbase’s correlation analysis, which demonstrates a strong market correlation between the Ethereum spot and futures markets.
“Having approved the ETH futures ETFs in part on the basis of such surveillance, the Commission has clearly determined that the CME surveillance may detect fraud in the spot market that would affect the spot ETPs, and the Sponsor believes by so much so that you should also approve spot ETH ETPs on that basis.”
Craig Salm, Chief Legal Officer at Grayscale, highlighted the widespread interest expected in a spot Ethereum ETF:
“Investors want and deserve access to Ethereum in the form of a spot Ethereum ETF and we believe the case is as strong as it was for spot Bitcoin ETFs.”
Grayscale’s Ethereum Trust is the largest investment fund in the world, managing assets worth $11.8 billion, equivalent to 2.5% of all ETH in circulation. The planned transition to an ETF would unlock more than $1.73 billion in value.
Grayscale ETH Spot ETF: What are the Chances of Its Approval?
Grayscale’s amended filing coincided with dwindling hopes for regulatory clearance for an Ethereum ETF. BeInCrypto reported earlier this week, citing Polymarket prediction market, that the probability was 36%. Currently, the odds have dropped to 26%.
This change may be related to a recent statement from two US senators urging the SEC to stop approving more cryptocurrency ETFs, citing potential risks to retail investors. They argue that cryptocurrencies like Ethereum lack the adequate trading volumes and integrity to support linked ETFs.
In addition, the senators question the close correlation between the futures markets for these assets. In addition, spot markets, which pose challenges for market surveillance and fraud prevention. Despite these bleak prospects, some industry experts remain optimistic.
Matt Hougan, chief investment officer at Bitwise, estimated the chances of approval for May at 75%. Eric Balchunas, senior ETF analyst at Bloomberg, said Grayscale’s latest amendment was several. Among them, a “ray of light in what has seemed like a lot of bad signs.”
ETH recently traded around $3,696, with a drop of 7.09% in the last few days and 6.60% in the last week.
By Audy Castaneda
