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Grayscale Files for New Ether Futures ETF Following Recent Legal Victory
Renowned crypto asset manager Grayscale Investments recently filed for a new Exchange-Traded Fund (ETF) that will track Ethereum (ETH) futures, as reported by the Wall Street Journal.
Grayscale’s Unique Approach
In its previous attempt to launch a crypto ETF, Grayscale filed under the Investment Company Act of 1940. This filing, while a significant step forward for the industry, faced regulatory hurdles and delays, a common theme in the crypto ETF space.
In the latest application, Grayscale’s pivot toward the Securities Act of 1933 demonstrates the company’s commitment to navigating regulatory challenges while catering to the surging demand for crypto investment options.
The Securities Act of 1933 primarily governs the issuance and sale of securities, providing a regulatory framework that is potentially more suitable for crypto futures ETFs. It allows for the registration of securities offerings, which aligns with the structure of ETFs, making it a potentially smoother process compared to the Investment Company Act of 1940.
Notably, ETFs have gained immense popularity as they provide investors with an accessible and regulated way to gain exposure to cryptocurrencies. These investment vehicles have gained traction among both retail and institutional investors who seek a more convenient way to enter the crypto market.
At least 12 candidates, including Volatility Shares, Bitwise, ProShares, VanEck, Roundhill, and Valkyrie Investments, have filed for Ethereum futures ETFs so far. The increasing number of applicants vying for approval indicates a strong market demand for such investment products. Market participants believe that, if approved, Ethereum futures ETFs could help further legitimize and institutionalize the crypto market.
A Win for Grayscale Over the SEC
Grayscale’s decision to file for an Ether futures ETF comes on the heels of a significant legal victory against the US Securities and Exchange Commission (SEC). In a recent ruling, a judge ordered the SEC to re-evaluate Grayscale’s proposal for a spot bitcoin ETF.
This ruling is seen as a positive development for the crypto industry, as it suggests that the SEC’s stringent stance on crypto-related ETFs may be subject to legal scrutiny and revision. The judge’s decision highlights the evolving nature of crypto regulation in the United States.
While the SEC has traditionally been cautious about approving crypto ETFs, the growing interest and demand from institutional investors and the broader public are compelling regulatory authorities to reconsider their approach.
Grayscale’s legal saga began in late 2021 when it filed an application with the SEC to convert its Grayscale Bitcoin Trust (GBTC) into a Bitcoin spot ETF. However, the SEC rejected Grayscale’s request in June 2022, citing concerns related to anti-fraud and investor protection requirements.
While Grayscale’s legal victory initially had a positive impact on the price of ETH, it’s essential to understand that crypto markets are highly volatile. In the immediate aftermath of the court’s ruling, ETH’s price surged above the $1,700 mark. However, the price rally proved short-lived as it retraced to around the $1,600 level.
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Grayscale Files for New Ether Futures ETF Following Recent Legal Victory