Grayscale Investments filed with the SEC for an Ethereum">Ethereum futures exchange-traded fund (ETF) on Tuesday. This proposed fund would trade Ether futures rather than the spot cryptocurrency.
The move comes as Grayscale continues its fight to convert its Bitcoin Trust into a spot Bitcoin ETF. A federal judge ruled in favor of Grayscale last month, overturning the SEC’s denial.
If approved, the Ethereum futures ETF would not directly hold Ether. It would strictly deal in Ether derivatives. This avoids the custody issue that spot crypto ETF applications face.
In 2021, the SEC first approved Bitcoin futures ETFs. These allow betting on crypto prices without owning the assets. But investors eagerly await spot crypto ETFs for direct exposure.
The SEC is reviewing several spot Bitcoin ETF applications, including from BlackRock. Approval could significantly expand crypto access for retail investors.
But the regulator remains hesitant to approve spot funds amid concerns over manipulation, custody and liquidity. Futures ETFs are seen as a halfway compromise.
Grayscale likely hopes an Ethereum futures ETF could curry favor with the SEC. However, the ultimate prize remains a spot Bitcoin ETF approval to unlock mainstream investment flows. The legal battle with regulators continues.
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