Bloomberg ETF analyst James Seyffart said Grayscale Investments is using its Ethereum (ETH) futures exchange-traded fund (ETF) application as a “Trojan horse” to force the U.S. Securities and Exchange Commission to approve its spot Ethereum ETF.
Seyffart said in a post on November 15 (Twitter) postal After the SEC postponed Grayscale’s ETH futures ETF bid, he believes that if the SEC approves Grayscale’s application, Grayscale will be able to seek approval of its spot Ether ETF application.
If the SEC rejects Grayscale’s bid, the asset manager may argue that the SEC is treating Bitcoin (BTC) and Ethereum futures ETFs differently, allowing one but not the other under the Securities Act of 1933.
“Watch (the SEC) try to approve or argue why this is different from the field. Or deny and argue why the product of the 1933 Act is significantly different than the product of the 1940 Act. Both are bad for the SEC (in my opinion) . A stroke of genius.”
Grayscale’s Ethereum futures ETF bid was submitted via Form 19b-4, which is the document an exchange uses to notify the SEC of security-based swap requests. Seyffart said that none of the approximately 40 approved ETH ETF products have gone through the 19b-4 approval process.
Seyffart was initially unsure why Grayscale filed its Ethereum futures ETF via 19b-4. He now believes that Grayscale is playing “chess” with the SEC, using the Ether Futures ETF as a “Trojan horse” to obtain a 19b-4 order from the regulatory agency, forcing it into a lose-lose situation.
I wasn’t initially sure why they were making this request. But my thinking has changed over the past few weeks and it’s basically this:
Grayscale is playing chess here, not checkers. They may hope to force the SEC to issue a 19b-4 decision on ETH futures ETFs…— James Seyff (@JSeyff) November 15, 2023
Seyffart and Van Buren Capital General President Scott Johnsson, agree Grayscale will not launch an Ethereum futures ETF.
“It’s questionable whether this product is tradable, but it’s useful as a tool to get spot ETH across the finish line,” Johnsson said.
related: Bitcoin ETFs Will Drive Institutional Adoption in 2024 – Galaxy Digital’s Mike Novogratz
Seyffart’s comments came before the U.S. Securities and Exchange Commission (SEC) Delay It made a decision on Grayscale’s Ethereum Futures ETF on November 15, two days before the November 17 deadline. Seifert said he was not surprised by the delays.
Hash index application On November 15, the Securities Regulatory Commission also suspended plans to convert its Bitcoin futures exchange-traded fund (ETF) into a spot product.
BlackRock expressed a similar view to Seyffart last week, arguing that the SEC has no legitimate reason to treat cryptocurrency spot and futures ETF applications differently.
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