The grayscale ETH futures ETF, a “Trojan horse” for the Ethereum spot ETF: analyst
Grayscale Investments is using its Ether (ETH) futures exchange-traded fund (ETF) application as a “Trojan horse” to force the U.S. Securities and Exchange Commission to approve its Ether spot ETF, analyst James Seyffart said from Bloomberg ETF.
Seyffart said in a November 15 post on Twitter after the SEC delayed Grayscale’s ETH futures ETF offering that he believed that if the SEC approved Grayscale’s application, it would allow Grayscale to litigate in favor of the approval of its application for a spot Ether ETF.
If the SEC rejects Grayscale’s offer, the asset manager could argue that the SEC treats Bitcoin (BTC) and Ether futures ETFs differently by allowing one under the Securities Act of 1933 but not the other .
“Look at (the SEC) trying to approve and explain why it’s different from the spot. Or deny and explain why the products of the 1933 Act are significantly different from the products of the 1940 Act. Both are bad for the SEC (in my opinion). A move of genius.
Grayscale’s Ether futures ETF offering was submitted via a Form 19b-4 – which exchange file to notify the SEC of a securities-based exchange request. Seyffart said none of the approximately 40 approved Ether ETF products had gone through the 19b-4 approval process.
Seyffart was initially unsure why Grayscale filed its Ether futures ETF via a 19b-4. He now believes Grayscale is playing “chess” with the SEC by using the Ether Futures ETF as a “Trojan horse” to obtain a 19b-4 order from the regulator to trap them in a lose-lose situation.
At first, I didn’t even know why they would file such a request. But my thoughts have evolved over the past few weeks and they are essentially as follows:
Grayscale plays chess, not checkers here. They are likely hoping to force the SEC to issue a 19b-4 ruling on an ETH futures ETF.…–James Seyffart (@JSeyff) November 15, 2023
Seyffart and Scott Johnsson, chief executive officer of Van Buren Capital General, agreed that Grayscale would not launch the Ether futures ETF.
“It is doubtful whether this product will ever come to market, but it is useful as a vessel to bring spot ETH to the finish line,” Johnsson said.
Related: Bitcoin ETFs Will Drive Institutional Adoption in 2024 – Mike Novogratz of Galaxy Digital
Seyffart’s comments come as the SEC delayed its decision on Grayscale’s Ether futures ETF to Nov. 15, two days before the Nov. 17 deadline. Seyffart said he was not surprised by the delay.
Hashdex’s application to convert its Bitcoin futures exchange-traded fund (ETF) into a spot product was also suspended by the securities regulator on November 15.
BlackRock shared a similar sentiment to Seyffart last week, arguing that the SEC does not have a legitimate reason to treat cryptocurrency spot and futures ETF applications differently.
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