Grayscale Withdraws Ethereum ETF Application Amid SEC Delays: Regulatory Hurdles?

Many speculations started among the crypto community, following the withdrawal of the Ethereum futures ETF application by the popular digital assets fund manager Grayscale. 

Grayscale Investments is a prominent player in the cryptocurrency sector which offers crypto investment products like cryptocurrency trusts. This firm provides institutional and individual investors with exposure to digital assets like Bitcoin, Ethereum, and others, through its various funds. In Q3 2023, registered with the United States Securities and Exchange Commission (SEC). In the crypto market, Grayscale underscores the growing institutional interest in digital currencies and blockchain technology. 

On 8 May 2024, Grayscale withdrew its Ethereum futures ETF application, as multiple times the SEC body rejected or postponed decisions on ETH ETF applications. 

Some crypto enthusiasts noted that Grayscale took this step because the SEC leaders are not in the mood to give room for more crypto ETF products and probably they are busy enough in the cases against top crypto exchanges. 

Currently, the top 8 crypto companies are under investigation or legal battle against the SEC body and people are thinking that probably this fact played an important role in Grayscale ETH ETF application withdrawal.

Bloomberg ETF analyst James Seyffart noted that Grayscale’s application withdrawal might have been a strategic move to mimic their past success with the SEC. 

According to James, Grayscale might have planned to push for approval of an ETH futures ETF while withdrawing the spot ETF application to avoid immediate conflict. However, withdrawing the application may also indicate a step to avoid legal challenges.

In short, no clarity came to the public domain regarding Grayscale’s latest decision but it will be interesting to see the impact on other fund managers over their ETH spot ETF applications. 

Just a couple of months ago, some experts claimed that the SEC body may impose pressure on the top fund manager, BlackRock, to withdraw ETH spot ETF application, even though they have a better relationship.

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