Grayscale, which applied for a futures ETF for the largest altcoin by market value, did not get the response it hoped for today. As January approaches, expectations for SEC approval of spot BTC ETFs are increasing. However, today the SEC postponed its decision on the futures ETH ETFs, which it had previously approved, to be initiated by Grayscale.
Grayscale Futures ETH ETF
It was intended to launch two Ethereum futures contracts that would track the Chicago Mercantile Exchange futures ETH price, one representing 50 Ether (“ETH Contracts”) and the other representing 0.10 Ether (“MET Contracts”). Futures ETFs are indexed to CME option contracts, and there are already different products approved for both BTC and ETH.
In today’s notice, the SEC wrote that it will conduct additional analyses to “prevent fraudulent and manipulative acts and practices” and to “protect investors and the market.” The Commission wants to receive answers to the following five questions, in addition to other comments that commentators may wish to submit regarding the proposed rule change (ETH approval).
- Considering the nature of the underlying assets held by the Trust, has the issuer appropriately presented the proposal for the Shares to be listed and traded under NYSE Arca Rule?
- Does the Exchange substantially present similar arguments to support the listing and trading of the Shares as those made in the Commission’s decisions approving the listing and trading of products based on CME bitcoin futures (“CME Bitcoin Futures ETPs”)? Do commentators agree that the arguments supporting the listing of CME Bitcoin Futures ETPs are equally valid for this application? Are there concerns about the susceptibility of Ether futures to fraud and manipulation, including the proof of stake consensus mechanism and the concentration of control or influence by a few individuals or organizations?
- What are the commentators’ views on whether the proposed Trust and Shares would be susceptible to manipulation?
- Based on the data and analysis provided by the Exchange, do commentators agree with the Exchange that CME represents a significant regulated market with respect to the Trust’s assets?
- The Exchange notes that several exchange-traded funds (“ETFs”) registered under the Investment Company Act of 1940, which have Ether futures contracts, have filed registration statements with the Commission, and these ETFs would offer the same exposure as the Trust. The issuer argues that “if the Commission allows these ETFs to start trading, it must also approve the Trust to trade.” What are the arguments for and against this?
The Commission requests that interested persons submit their views, data, and arguments on the above-mentioned topics in writing, as well as any other concerns they may have related to the proposal.
The comment announcement signed by Sherry R. Haywood suggests that the SEC is confused by the transition to PoS, which is why approvals are delayed.
