Two leading crypto asset managers, namely Grayscale and Bitwise, have halted their Ethereum futures exchange-traded fund (ETF) plans due to increased scrutiny from US regulators. Here are the details…
Bitwise and Grayscale halt Ethereum ETF plans
A modified SEC filing from Grayscale on Wednesday shows that the firm has also discontinued its plans to launch its Ethereum (ETH) futures product. Grayscale launched an “actively managed fund for Ethereum futures contracts” last week. Alongside the Global Bitcoin Composite ETF, the proposal comes with plans to launch a private ETF that will invest in privacy-focused Blockchain companies and crypto assets.
Grayscale responded to the SEC’s accusation on May 17, claiming that the underlying asset did not qualify as a security. “It plans to respond promptly to SEC personnel with a statement regarding the legal basis for Grayscale’s position,” the firm said. On the other hand, Bitwise has completely withdrawn its application to launch an Ether-based futures ETF. In his amendment filing to the SEC on May 17, the crypto asset manager claimed that they no longer “intend to keep the fund active and that no securities of the fund or trust will be sold.”
However, a document as amended on May 17 only shows proposals for the Global Bitcoin Composite ETF and Privacy ETF. Grayscale’s application for an Ethereum futures ETF has spurred other companies like Bitwise, as well as Direxion, Roundhill Investments, and Valkyrie, to do the same.
SEC warns Grayscale about Filecoin
cryptocoin.com As we reported, Grayscale’s change to its ETF filing comes just after the SEC asked the asset manager to withdraw its Filecoin Trust application. The regulator warned that its underlying asset Filecoin qualifies as a security. Launched in 2021, the trust has approximately $470 million in assets under management. The fund group moved last month to register the trust’s shares under the Securities Exchange Act of 1934.
However, the SEC stated in a May 16 letter to Grayscale that it considers Filecoin (FIL) a security. As a result, he said he had to register the trust under the Investment Company Act of 1940. “Grayscale does not believe that the FIL is a security under federal securities laws,” the company said in a statement Wednesday. The firm also awaits a ruling in its lawsuit against the SEC, stemming from the regulatory agency blocking the conversion of the Grayscale Bitcoin Trust (GBTC) into an ETF.
Although funds with Bitcoin futures contracts entered the regulated US market in October 2021, the long-planned ETH futures counterparts have yet to be approved. Meanwhile, a number of asset managers have moved to launch their own ETH futures ETFs. However, the SEC did not approve any of them. In August 2021, VanEck and ProShares withdrew their ETH applications, days after they submitted their applications to the SEC. SEC Chairman Gary Gensler did not give a clear answer to the question of whether ETH is a security or a commodity during the House of Representatives Financial Services Committee meeting last month.
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