ETFs
NYSE Arca withdraws deposit of ETH ETF 19-b4 futures contract from Grayscale
The US SEC reported a critical grayscale withdrawal on May 7 this could have broad implications for the spot Ethereum AND F.
Specifically, NYSE Arca withdrew a 19-b4 filing containing a proposed rule change through which it intended to list and trade shares of Grayscale’s Ethereum Futures Trust ETF.
NYSE Arca withdrew its proposal on May 3, days before the SEC’s notice. The regulator should have decided on the proposed rule change before May 30.
Grayscale has not commented on the removal.
Implications for the Bitcoin Spot ETF
Grayscale’s pending Ethereum futures ETF is not directly related to its more high-profile attempt to convert the Grayscale Ethereum Trust (ETHE) into a spot ETF.
However, the two repositories are implicitly linked. Van Buren Capital GP Scott Johnson says that Grayscale submitted the Ethereum Futures ETF application to compel the SEC to produce a 19b-4 order that records its analysis of futures ETFs.
Johnson said:
“This [19-b4] The order is an important part of the mosaic that the SEC was going to be forced to navigate in the run-up to the ETH spot ETF deadlines coming this month.
Johnson questioned the decision, saying: “I don’t understand the withdrawal here. He said an order would not directly require approval of comparable funds, adding that Grayscale should “really want” the 19-b4 order and that it “can only help.”
Trojan horse
Bloomberg ETF Analyst James Seyffart called the proposed rule change a “Trojan horse filing” that would have allowed Grayscale to sue the SEC for disapproval.
Seyffart also expressed confusion, as the SEC could have rejected the proposal outright. He assumed that the SEC had spoken with Grayscale and that the agency’s statements had convinced it to drop the application. He clarified that his explanation was a “complete assumption.”
Seyffart added that withdrawal might have appeased the SEC at the cost of reducing options for Grayscale and others to sue the agency.