Grayscale ETH Futures ETF A ‘Trojan Horse’ For Space Ethereum ETF: Analyst

According to Bloomberg ETF analyst James Seifert, Grayscale Investments is using the Ether (ETH) futures exchange-traded fund (ETF) application as a “Trojan horse” to get the United States Securities and Exchange Commission to approve the spot Ether ETF.

Seifert said in a Nov. 15 X (Twitter) post that the SEC has delayed the auction of Greyscale's ETH futures ETF so that if the SEC accepts Greyscale's application, it will allow Greyscale to argue for approval of the Spot Ether ETF application.

If the SEC rejects Greyscale's bid, the asset manager could argue that the SEC is treating Bitcoin (BTC) and Ether Futures ETFs differently, as allowed under the Securities Act of 1933.

“Look [the SEC] Try to justify and argue why this is out of place. Or deny and argue why the products of the 1933 Act are different from the products of the 1940 Act. Both are bad for the SEC [in my opinion]. Move over, genius.”

The bid for Greyscale's Ether Futures ETF was filed via a Form 19b-4—a filing that the exchange notifies the SEC of a security-based swap request. None of the 40 or so approved ether ETF products have gone through the 19b-4 approval process, Seifert said.

Seyffart wasn't sure why Grayscale initially filed the Ether Futures ETF through 19b-4. Now Grayscale believes that it is playing “chess” with the SEC by using the Ether Futures ETF as a “Trojan horse” to get them into bankruptcy status from the regulator.

At first, I wasn't sure why they were submitting this issue. But my thoughts have evolved over the last few weeks and they are basically this: Grayscale is playing chess, not a validator here. They hope to force the SEC to issue a 19b-4 ruling on the ETH futures ETF.…

— James Seyff (@JSeyff) November 15, 2023

Seifert and Scott Johnson, president of Van Buren Capital General, agreed that Grayscale would not launch an Ether futures ETF.

“It's doubtful that this product will ever be traded, but it's useful as a vessel to get ETH across the finish line,” Johnson said.

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Seifert's comments come as the SEC delayed its decision on Greyscale's Ether Futures ETF to Nov. 15 — two days ahead of the Nov. 17 deadline. Seifert said he was not surprised by the delay.

Hashdex's application to convert its Bitcoin Futures exchange-traded fund (ETF) into a spot product was put on hold by the securities regulator on November 15.

Blackgrat shared a similar sentiment with Seifert last week, arguing that the SEC has no legal reason to treat cryptocurrency spot and futures ETF applications differently.

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