Grayscale’s Ether Futures ETF Application: A Trojan Horse for SEC Approval?
Introduction
Grayscale Investments is using its Ether (ETH) futures exchange-traded fund (ETF) application as a “trojan horse” to corner the United States Securities and Exchange Commission into approving its spot Ether ETF, according to Bloomberg ETF analyst James Seyffart. In a recent tweet, Seyffart suggested that if the SEC approves Grayscale’s application for the futures ETF, it would give Grayscale leverage to argue for the approval of its spot Ether ETF application.
The Trojan Horse Strategy
Seyffart believes that if the SEC denies Grayscale’s bid for the futures ETF, the asset manager could argue that the SEC is treating Bitcoin (BTC) and Ether futures ETFs differently. While one is allowed under the Securities Act of 1933, the other is not. Seyffart refers to this strategy as a “genius move” by Grayscale. He suggests that whether the SEC approves or denies the application, it would be unfavorable for the regulator.
Grayscale’s Ether futures ETF bid was submitted through a form 19b-4, which is typically not used for ETF products. Seyffart was initially puzzled by this choice, but he now believes that Grayscale is playing a strategic game with the SEC. By using the Ether Futures ETF as a “trojan horse,” Grayscale aims to obtain a 19b-4 order from the regulator to corner them into a lose-lose situation.
The Opinion of Experts
Scott Johnsson, General President at Van Buren Capital General, shares Seyffart’s sentiment. He believes that Grayscale is unlikely to launch the Ether futures ETF, but the product serves as a vessel to push for the approval of the spot Ether ETF.
SEC’s Decision Delay
On November 15, the SEC announced a delay in its decision on Grayscale’s Ether futures ETF, two days before the original deadline. Seyffart wasn’t surprised by this delay, as the SEC often takes its time to review ETF applications.
The SEC also put Hashdex’s application to convert its Bitcoin futures ETF into a spot product on hold on the same day. This delay further highlights the need for clarity and consistency in the SEC’s treatment of cryptocurrency spot and futures ETF applications.
Conclusion
Grayscale’s use of its Ether futures ETF application as a “trojan horse” to push for the approval of its spot Ether ETF is a strategic move that aims to leverage the SEC’s decision-making process. Whether the SEC approves or denies the application, it puts the regulator in a challenging position. This move by Grayscale sheds light on the complexities surrounding ETF approvals in the cryptocurrency market and highlights the need for clear regulations in this evolving industry.
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