Grayscale’s Official Filing for Ether Futures ETF Creates Buzz
In a notable development within the realm of digital currency investments, Grayscale Advisors has taken steps to register as a commodity pool operator with the U.S. Commodity Futures Trading Commission (CFTC) for the launch of a new Ether futures exchange-traded fund (ETF). The move signifies Grayscale’s strategic expansion and commitment to diversifying its crypto investment offerings.
Venturing Into Ether Futures ETF
On September 19, Grayscale formally submitted a proposal to the Securities and Exchange Commission (SEC) to list and trade shares of the “Grayscale Ethereum Futures Trust ETF” on the New York Stock Exchange Arca under Rule 8.200-E of the Securities Exchange Act of 1934. Grayscale Advisors, known as the “sponsor” in the filing, will oversee the management of this ETF.
According to the proposal, Grayscale Advisors is actively working on obtaining registration as a commodity pool operator with the CFTC and securing membership in the National Futures Association. Additionally, Grayscale has engaged Videnct Advisory as a subadviser to serve as the trust’s commodity trading adviser, emphasizing the seriousness of its foray into Ether futures.
Investment Approach
The Grayscale Ethereum Futures Trust ETF intends to maintain a portfolio primarily composed of Ether futures contracts. Notably, the fund aims to maintain a “roughly constant expiration profile,” indicating that it will not hold futures positions until its cash settlement.
Interestingly, the ETF’s design eliminates the need for an Ether custodian, as stated in the filing. Instead, the trust will initiate open positions in futures contracts by depositing an initial margin amount, functioning akin to a cash performance bond. This margin deposit serves as a safeguard, ensuring traders’ performance in their futures contract transactions.
Also Read: Grayscale’s Message To The SEC Following Court Victory
A Growing Trend
Grayscale’s move into the Ether futures ETF arena follows a trend in the digital asset management sector. Several firms have recently filed for Ether futures ETFs with the SEC, with Valkyrie’s application in mid-August being a notable example. The SEC’s reported willingness to allow the first ETFs based on Ether futures has generated optimism throughout the Ethereum market.
It’s worth noting that Grayscale had recently achieved a significant, albeit partial, victory in its ongoing engagement with the SEC. In its quest to convert the Grayscale Bitcoin Trust (GBTC) into a listed spot Bitcoin ETF, Grayscale faced rejection from the SEC, prompting a legal battle. The appeals court eventually granted Grayscale’s petition for review and vacated the SEC’s order to deny the GBTC listing application. While this victory does not guarantee the immediate listing of a Grayscale spot Bitcoin ETF, it has been met with enthusiasm within the crypto community.
Main Pointers:
- Grayscale Advisors takes a significant step towards launching an Ether futures ETF by registering as a commodity pool operator with the CFTC.
- The proposed ETF aims to maintain a consistent expiration profile and eliminate the need for an Ether custodian, opting for an initial margin deposit system.
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