It remains unclear whether the SEC will approve spot Ethereum ETF applications. Despite this, leading crypto asset management firm Grayscale’s pursuit of the ETF continues. The firm has modified its proposal to upgrade its Ethereum Trust to a spot Ethereum ETF that will be listed and traded on NYSE Arca.
Grayscale changes Ethereum ETF filing
The US Securities and Exchange Commission (SEC) has already approved Ethereum futures ETFs. That’s why Grayscale argues that it should also sanction ETFs that provide direct exposure to spot Ethereum. The company claims that the oversight carried out on the Ethereum market by the Chicago Mercantile Exchange (CME) is sufficient to protect against fraud and manipulation.
Grayscale cites Coinbase’s correlation analysis. Thus, he tries to show that there is a strong market correlation between the spot and futures markets of Ethereum. The company supports its claims with this argument. In this context, Grayscale says:
By approving ETH futures ETFs in part on the basis of this oversight, the Commission has clearly determined that CME oversight can detect spot market fraud that would impact spot ETPs, and the Sponsor therefore believes that it should also approve spot ETH ETPs on this basis.
“Investors want access to the spot Ethereum ETF product!”
Grayscale’s Chief Legal Officer Craig Salm highlights the expected widespread interest in the spot Ethereum ETF. “Investors want access to Ethereum in the form of a spot Ethereum ETF product,” Salm said. They deserve it. “We believe this is just as strong for spot Bitcoin ETFs,” he adds.
cryptokoin.comAs you follow from , Grayscale’s Ethereum Trust is the world’s largest investment fund, managing assets worth $11.8 billion, which is 2.5% of all ETH in circulation. The planned transition to the ETF will unlock over $1.73 billion in value.
What are the chances of approval?
Grayscale’s amended filing coincides with dwindling hopes for regulatory approval for an Ethereum ETF. Earlier this week Polymarket’s prediction market reported the probability at 36%. Currently, the odds have dropped even further to 26%. This shift may be linked to a recent memorandum from two U.S. senators urging the SEC to stop approving additional crypto ETFs, citing potential risks to retail investors. They argue that cryptocurrencies like Ethereum do not have enough trading volume and integrity to sustain linked ETFs.
Additionally, senators are skeptical of the close correlation between the futures markets and spot markets of these assets. In this context, they point out the difficulties in market surveillance and fraud prevention. Despite these negative expectations, some industry experts remain optimistic. Matt Hougan, Bitwise’s chief investment officer, estimates there is a 75% chance of approval by May. On the other hand, Bloomberg senior ETF analyst Eric Balchunas is hopeful about Grayscale’s latest change. In this context, Balchunas notes that there is “a ray of light in what seems like a bunch of bad signs.”
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