Grayscale, Bitwise Back Off Ethereum ETF Plans

Grayscale Investments and Bitwise Asset Management have backed off from plans to issue a crypto exchange-traded fund that tracks futures in the second largest cryptocurrency, barely one week after their efforts to create the ETFs was swiftly followed by others. 

Stamford, Connecticut-based Grayscale, issuer of the $17.2 billion Grayscale Bitcoin Trust, removed mention of the Grayscale Ethereum Futures ETF from an updated filing that had been submitted May 9 with the Securities and Exchange Commission. That filing still seeks approval of two other crypto-related funds. 

Bitwise likewise filed to withdraw approval of its Bitwise Ethereum Strategy ETF. 

Grayscale’s effort to create the ethereum futures fund came as crypto prices soar, and as the company is in the midst of suing the SEC for permission to launch the first spot bitcoin ETF. Ethereum has soared 51% this year, while bitcoin, the largest cryptocurrency, has gained 64%, according to CoinDesk. 

Grayscale’s plan called for it to invest in Chicago Mercantile Exchange ether futures. Its SEC submission was followed the next day by paperwork from Bitwise, Direxion Shares and Roundhill Investments, all seeking ethereum futures ETFs. Ether, the currency on the ethereum network, is second to bitcoin in market capitalization, at $217.8 billion, according to CoinDesk.

Grayscale, Direxion and Roundhill didn’t immediately respond to inquiries seeking comment. Bitwise General Counsel Katherine Dowling wrote in a statement emailed to etf.com that “we look forward to having a productive dialogue with the SEC staff to establish a path forward for these and other digital-asset-based products.” 

The withdrawals may be predicated on the manner in which the SEC has dealt with previous crypto filings, Bloomberg Intelligence analyst James Seyffart told the news agency.  
“It’s not surprising that the SEC is likely forcing them to withdraw the Ethereum futures ETFs based on the way the SEC has handled past filings,” he said. 

Grayscale’s filing still includes permission to create the Grayscale Global Bitcoin Composite ETF (BTC), tracking the Indxx Global Bitcoin Composite Index, as well as the Grayscale Privacy ETF (PVTC), which would focus on privacy, security and blockchain companies. 

Contact Ron Day at [email protected] or follow him on Twitter at @RonDayETF