Digital currency investment firm Grayscale has joined the ranks of companies seeking to launch an Ethereum futures exchange-traded fund (ETF) by filing a proposal with the Securities and Exchange Commission (SEC). This move comes shortly after Valkyrie, another asset management firm, filed a similar proposal for an Ether futures ETF. Grayscale’s filing outlines the details of the Grayscale Ethereum Futures Trust (ETH) ETF and its intention to trade shares on the New York Stock Exchange (NYSE) Arca Rule 8.200-E.
Managed by Grayscale Advisors, also known as the “sponsor,” the Grayscale Ethereum Futures Trust is designed to hold Ether futures contracts. The ETF aims to maintain a consistent expiration profile by avoiding carrying futures positions all the way to cash settlement. Grayscale is in the process of registering as a commodity pool operator with the Commodity Futures Trading Commission and becoming a member of the National Futures Association. To ensure the trust’s commodity trading advisory needs are met, Grayscale has engaged Videnct Advisory as a subadviser.
Unlike other Ether futures contracts, the Grayscale Ethereum Futures Trust does not require the use of an Ether custodian. Instead, the trust will deposit an initial margin amount to initiate open positions in futures contracts. These margin deposits function as cash performance bonds, securing the trader’s performance when purchasing or selling futures contracts.
A Growing Trend
Grayscale and Valkyrie are part of a growing number of firms seeking to offer Ethereum futures ETFs. Several other companies have filed proposals with the SEC, indicating a rising market demand for such investment products. Bloomberg reported that the SEC was ready to approve the first ETFs based on Ether futures, sparking optimism within the Ethereum community.
In addition to its latest proposal for the Ethereum futures ETF, Grayscale has been embroiled in a legal battle with the SEC over its Grayscale Bitcoin Trust (GBTC). After the SEC rejected Grayscale’s application for listing the GBTC, the company filed a lawsuit. The appeals court ruled in favor of Grayscale, granting a review of their petition and vacating the SEC’s order to deny the listing application. While this victory does not guarantee the eventual listing of a Grayscale spot Bitcoin ETF, it has nevertheless been met with enthusiasm within the crypto community.
Grayscale’s proposal for the Grayscale Ethereum Futures Trust (ETH) ETF highlights the growing trend of companies seeking to provide investors with exposure to Ethereum futures. As the demand for digital asset investment products continues to rise, the SEC’s potential approval of ETFs based on Ether futures could open up new opportunities for investors. With the legal battle between Grayscale and the SEC over the GBTC listing application still ongoing, the crypto community eagerly awaits further developments in the world of ETFs and digital currency investments.