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Two leading cryptocurrency asset managers — Grayscale Investments and Bitwise Asset Management — have suspended their plans for an Ether (ETH) futures exchange-traded fund (ETF) in light of increasing scrutiny from regulators in the United States.
On May 17, Grayscale submitted an amendment to its filing with the Securities and Exchange Commission (SEC) to eliminate references to an Ether futures ETF. This amendment follows closely on the heels of their announcement to introduce three ETF products. The other two main offerings consist of a semi-spot Bitcoin (BTC) ETF that aims to invest in the spot BTC market, and a privacy ETF that targets investments in blockchain companies and digital assets focused on privacy.
Grayscale just filed for a semi-spot bitcoin ETF, as well as Ethereum Futures ETF and a Privacy ETF. Interesting.. pic.twitter.com/MPruDolp7G
— Eric Balchunas (@EricBalchunas) May 9, 2023
The amendment to Grayscale’s ETF filing occurred shortly after the SEC requested that the asset manager withdraw its application for a Filecoin Trust. The regulatory agency cautioned that the underlying asset, Filecoin (FIL), is classified as a security.
SEC tells Grayscale to withdraw the ether futures ETF filing, watch for the rest to follow suit, deja vu all over again. Scoop via @VildanaHajric pic.twitter.com/NUXy4pFfJi
— Eric Balchunas (@EricBalchunas) May 17, 2023
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In response to the SEC’s assertion, Grayscale contended that the underlying asset does not meet the criteria of a security. The firm “plans to promptly address the SEC staff with a detailed explanation of the legal foundation for Grayscale’s stance.”
Conversely, Bitwise has completely withdrawn its application to establish an ETH-based futures ETF. In its amendment filing with the SEC on May 17, the cryptocurrency asset manager stated that it does not “plan to seek effectiveness of the fund and no securities of the fund were sold, or will be sold, pursuant to the aforementioned post-effective amendment to the trust’s registration statement.”
Related: GBTC approval could return a ‘couple billion dollars’ to investors: Grayscale CEO
Bitwise did not provide a response to Cointelegraph’s inquiry regarding the matter by the time of publication.
A Bitcoin-based futures ETF was launched in the last quarter of 2021, leading many within the cryptocurrency sector to speculate that a spot crypto ETF would soon follow. However, after two years and a series of significant downturns in the crypto market in 2022, regulators have become increasingly doubtful about such products.
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