Grayscale court victory used in arguments for spot ether ETF

Grayscale Investments’ August victory over the SEC in the DC Circuit Court of Appeals catalyzed the latest ether ETF filings, a segment observer says

article-image

Andrey_Popov/Shutterstock modified by Blockworks

share

More spot ether ETF filings are likely imminent as industry watchers say SEC approval of ether futures and spot bitcoin funds would all but clear the way for such proposed funds. 

Firms vying to bring such products to market have signaled in filings they believe Grayscale Investments’ win against the SEC in the DC Circuit Court of Appeals last month helps their cause.

Others agree.

Nate Geraci, president of the ETF Store, commented, “Grayscale is clearly bulldozing a regulatory path for spot crypto ETFs, and other fund companies are happy to jump in behind.”

On Wednesday, Ark Invest and 21Shares revealed it was seeking to launch a fund that would directly hold ether, unlike the recently proposed ether futures ETFs.

Developments over the last weeks and months suggested it was an opportune time to start expanding conversations around ether products, people familiar with the filing told Blockworks

Fund group VanEck, which first filed for a spot ether ETF in 2021, renewed its effort to offer such a product the same day.     

Cboe BZX Exchange — the venue on which the proposed fund would trade — filed forms Wednesday detailing reasons for the SEC to approve the planned offerings. These documents highlight the SEC’s approval of bitcoin futures ETFs and emphasize that the Chicago Mercantile Exchange (CME) bitcoin futures market is a substantially regulated and sizable market.

The filings add that the regulator’s continued refusal to allow spot bitcoin ETFs is due to “the seemingly conflicting basis that the CME bitcoin futures market is not a regulated market of significant size — an issue Cboe says was “resolved” in the DC Circuit Court of Appeals.  

Judges in the Grayscale case ruled that approving bitcoin futures ETFs, but not the conversion of its Bitcoin Trust (GBTC) to an ETF, was “arbitrary and capricious.”

“There’s no question Grayscale’s recent court victory was the primary catalyst in these spot ether ETF filings,” Geraci told Blockworks. “ARK and VanEck were clearly prepared for a favorable Grayscale outcome and quickly pounced on the opportunity to file for spot ether ETFs.”

Chance of approval?

The spot ether ETF proposals are the latest in a long list of crypto funds the SEC must rule on, the decisions on all of which could be connected.

In addition to fund issuers filing for a range of spot bitcoin ETFs in recent months, firms have put planned ether futures funds in front of the regulator in recent weeks. 

Read more: SEC now ready to consider ETH futures ETFs, sources say — but what’s changed?

Bloomberg Intelligence ETF Analyst James Seyffart said during a Thursday webinar that the spot ether ETF filings — in addition to mentioning the Grayscale ruling — point out a surveillance-sharing agreement with Coinbase and call the CME a regulated market — “basically all the things we think are the reasons we’re going to get [a] spot bitcoin [ETF].” 

“They’re basically betting that the SEC is not going to be able to figure out a way to deny spot bitcoin ETFs here,” Seyffart said of the issuers filing to launch spot ether products.

If the Grayscale ruling stands and the SEC allows spot bitcoin ETFs to come to market, Geraci argued, the regulator would have a tough time justifying the denial of spot ether ETFs. 

“The SEC appears backed into a corner right now and ETF issuers are emboldened to push the envelope,” Geraci added.

Sumit Roy, a senior analyst at ETF.com, said the approval of both a spot bitcoin ETF and an ether futures ETF are approved, a spot ether fund would be “all but certain.”

Several industry watchers agree that more spot ether ETF proposals are imminent, and soon. 

Seyffart noted that Grayscale could even look to convert its Ethereum Trust (ETHE) to an ETF, but added that is more likely once the firm gets more clarity on the fate of GBTC.    

“As we’ve seen in the case of spot bitcoin ETF filings and ether futures ETF filings, the first filing tends to be followed by others as issuers jockey to get as close to the front of the line as possible,” Roy said.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

Scientific reputation should be determined by a decentralized community of scientists, not the validation of higher institutions

article-image

Paxos is getting off scot-free after the SEC said it wouldn’t pursue legal action against the company

article-image

The Srcful partnership is part of a broader plan to onboard Helium “subnetworks”

article-image

Plus, a look into US spot BTC funds six months into trading

article-image

A Swedish energy-focused project named Srcful proposed to become a Helium subnetwork with its own ENERGY token

article-image

Securitize CEO Carlos Domingo thinks BUIDL will potentially hit its next $500 million milestone in just a few months