Grayscale Investments is utilizing its Ethereum futures exchange-traded fund (ETF) filing as a strategic move, according to Bloomberg ETF analyst James Seyffart. Seyffart highlighted that Grayscale's Ethereum futures ETF filing has been perceived as a “Trojan horse” tactic aimed at compelling the U.S. Securities and Exchange Commission (SEC) to approve its spot ether ETF.
Following the SEC's postponement of Grayscale’s ETH futures ETF application, Seyffart took to Twitter on November 15 expressing his belief that if the SEC greenlights Grayscale’s application, it could pave the way for the approval of its spot Ether ETF application. Conversely, if the SEC rejects Grayscale's bid, asset managers may contend that the SEC is treating Bitcoin and Ether differently, which could lead to a regulatory debate. The distinction between Ether futures and Bitcoin futures ETFs lies in the Securities Act of 1933, which permits one but not the other. Seyffart opined that both outcomes could unfavorably impact the SEC's stance.
Grayscale's Ethereum futures ETF bid was filed via Form 19b-4, a notice submitted to the SEC for security-based swap requests. Seyffart mentioned that none of the approximately 40 approved ETH ETF products have undergone the 19b-4 approval process.
Initially unsure about Grayscale's approach with its Ethereum futures ETF filing via 19b-4, Seyffart now posits that Grayscale is strategically playing a "chess" match with the SEC. The filing of the Ethereum futures ETF is seen as a “Trojan horse” maneuver, aiming to secure a 19b-4 order from the regulator, ultimately cornering the SEC into a lose-lose scenario. Scott Johnsson, General Managing Director at Van Buren Capital, shared Seyffart’s view, indicating doubts about the tradability of this product but acknowledging its utility as a tool to push forward the approval of spot ETH.
As the SEC delayed its decision on the Grayscale Ethereum Futures ETF on November 15, two days before the November 17 deadline, Seyffart expressed his lack of surprise at the delay. Simultaneously, Hashdex's proposal to transform its Bitcoin futures ETF into a spot product was also put on hold by the Securities Regulatory Commission on the same day. These delays coincide with BlackRock’s recent statement echoing Seyffart’s perspective, suggesting that there’s no valid reason for the SEC to treat cryptocurrency spot and futures ETF applications differently.
