NYSE Arca Withdraws Crucial Ethereum ETF Filing

NYSE Arca recently pulled back a significant filing with the Securities and Exchange Commission (SEC) regarding a rule change for listing Grayscale’s Ethereum Futures Trust ETF. This withdrawal happened on May 3, avoiding a required decision from the SEC by May 30.

Announced on May 7, this move could impact future Ethereum spot Exchange Traded Funds (ETFs). The filing, termed a 19-b4, was strategically placed by Grayscale to push the SEC to clarify its stance on futures-based ETFs.

Scott Johnson from Van Buren Capital GP views the filing as a tactical move to document the SEC’s analysis before deadlines for Ethereum spot ETFs. Johnson is puzzled by the withdrawal, arguing that even if it didn't guarantee approval, the documented decision could have supported Grayscale's future regulatory engagements.

James Seyffart, an ETF analyst at Bloomberg, labeled the proposal a “Trojan horse,” suggesting that if it had been rejected, it could have given Grayscale a basis to challenge the SEC. He suspects that private discussions between Grayscale and the SEC might have influenced the decision to withdraw, though this is merely conjecture.

Seyffart believes this move might have been an attempt to maintain good relations with the SEC, sacrificing potential legal strategies. The retraction not only affects the futures ETF but also relates to Grayscale’s broader goal to transform its Grayscale Ethereum Trust (ETHE) into a spot ETF.

The outcomes of these proceedings will shape the regulatory landscape for cryptocurrency investments in the U.S. Grayscale has yet to comment on the withdrawal, leaving space for speculation about its implications.