Grayscale Takes Step in Converting Ether Trust to ETF
The crypto focused asset manager filed an S-3 registration statement with the SEC Tuesday.
Grayscale Investments, the crypto-focused asset manager that operates the largest bitcoin ETF, took the next step in attempting to convert its Grayscale Ethereum Trust into an exchange-traded fund.
The firm filed an S-3 document with the Securities and Exchange Commission April 23 to register shares of the Ethereum Trust under the Securities Act of 1933, according to the firm’s press release. The prospectus is a vital document necessary for the SEC to move forward before approving the ETF. The ETF would trade with the ticker ETHE.
The New York Stock Exchange Arca already filed a 19b-4 rule change form with the SEC to list shares of the new ETF on their exchange in October.
Firms Vying to Roll Out Spot Ether ETFs
A number of firms, including BlackRock Inc., Fidelity Investments, and ARK Invest, are vying to roll out their own versions of spot ether ETFs after the historic success of the ten spot bitcoin funds that were approved by the SEC in mid-January. So far, the new spot bitcoin ETFs have accumulated about $60 billion under management, even as Grayscale's Bitcoin Trust (GBTC) continues to see billions in outflows due to its comparatively high management fee of 1.5%.
So far, the agency has delayed multiple spot ethereum filings, including Grayscale’s 19b-4 rule change earlier on Tuesday, along with a filing from Franklin Templeton.
Ether Hurdles
While the SEC is slated for a May decision on the vehicles, which would hold physically backed Ethereum as opposed to Ethereum futures contracts, analysts and executives doubt that the agency will approve the funds that soon. Unlike in the months leading up to the spot bitcoin ETF approval, the agency has not been meaningfully engaging with issuers on the issues related to their filings, Bloomberg analyst James Seyffart said last month.
etf.com's Sumit Roy agreed the chances of approval are narrowing.
“Given that the Grayscale Ethereum Trust (ETHE) is currently trading at a hefty 25% discount to its net asset value—a significant increase from 8% in March—the market is implying that the odds of a spot ether ETF approval by May aren't very high,” explained etf.com analyst Sumit Roy.
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