Playing Chess with the SEC
Grayscale Investments is strategically using its Ether (ETH) futures exchange-traded fund (ETF) application to push for the approval of its spot Ether ETF, according to Bloomberg ETF analyst James Seyffart. In a recent tweet, Seyffart explained that if the Securities and Exchange Commission (SEC) approves Grayscale's futures ETF application, it would provide a strong argument for the approval of its spot Ether ETF. On the other hand, if the SEC denies the futures ETF bid, Grayscale could argue that the SEC is treating Bitcoin (BTC) and Ether futures ETFs differently.
A Trojan Horse Strategy
Seyffart believes that Grayscale's decision to file its Ether futures ETF application via a form 19b-4 is a strategic move to corner the SEC into a lose-lose situation. The 19b-4 filing is typically not used for ETF products, and none of the approved Ether ETF products have gone through this process. By using the Ether futures ETF as a "trojan horse," Grayscale aims to obtain a 19b-4 order from the SEC, pushing them to make a decision on both the futures and spot Ether ETF applications.
The Fate of the Ether Futures ETF
Despite the submission of the Ether futures ETF application, industry experts, including Seyffart and Scott Johnsson from Van Buren Capital General, doubt that the product will ever be traded. Instead, they see it as a vessel to pave the way for the approval of the spot Ether ETF.
SEC Delays Decision
The SEC recently delayed its decision on Grayscale's Ether futures ETF, which was expected by November 17. Seyffart expressed no surprise at the delay. Additionally, Hashdex's application to convert its Bitcoin futures ETF into a spot product was also put on hold by the SEC on the same day.
Similar Sentiments from BlackRock
Last week, asset management giant BlackRock echoed Seyffart's sentiment, arguing that the SEC does not have a valid reason to treat cryptocurrency spot and futures ETF applications differently.
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