Ethereum ETF Amendment: Grayscale Awaits Imminent Approval

Grayscale’s Chief Legal Officer, Craig Salm, has announced that the company has submitted a revised Form 19b-4 for its Ethereum Trust to the U.S. Securities and Exchange Commission (SEC). Salm considers the move a crucial step in Grayscale’s effort to upgrade ETHE to start trading on the New York Stock Exchange (NYSE) Arca. In his opinion, investors need access to Ethereum in the form of spot Ethereum ETFs as much as they have proven to need Bitcoin.

We just filed @Grayscale Ethereum Trust's amended Form 19b-4 filing. This is an important step in our effort to uplist $ETHE to NYSE Arca.

Investors want and deserve access to #Ethereum in the form of a spot Ethereum ETF and we believe the case is just as strong as it was for… pic.twitter.com/fOwJlHS71o

— Craig Salm (@CraigSalm) March 15, 2024

Like many other applicants, Grayscale intentionally sought a means to give investors access to ETH. In October, it moved to teaming up with NYSE Arca and filing a request with the SEC to swap its ETHE for a spot Ethereum ETF. Rather than get a favourable response like it did with its spot Bitcoin ETF after the court interfered, Grayscale was kept on hold, citing prolonged scrutiny.

The initial deadline of November 17, 2023, was extended further to a later date. As the date drew closer, Grayscale announced another extension for its Ethereum ETF, pushing it to January 25. This extension aims to allow ample time to assess the proposal thoroughly. Several other filers also had a decision on their applications postponed by the regulator.

Ethereum ETF Faces Approval Uncertainty

Previously, market experts were optimistic about SEC approval, citing a key deadline set for May this year as significant. Given the success of spot Bitcoin ETFs, one might anticipate the SEC will approve Ethereum ETF filings promptly. However, some uncertainties are threatening this stance.

Some U.S. lawmakers, including Rhodes Island Senator Jack Reed and California Senator Laphonza Butler, wrote to SEC Chair Gary Gensler. They stressed careful review for crypto ETF approval, focusing on market integrity and safeguarding investors through meticulous scrutiny.

“Finally, we believe the SEC should strictly limit the precedential application of these approvals,” the senators outlined.

Not everyone sees eye-to-eye with the Senators, though. Coinbase’s top lawyer, Paul Grewal, publicly slammed the letter on X (formerly Twitter). He claims that crypto commodities like Ethereum demonstrate robust market quality that exceeds some of the most liquid stocks. Grewal cited Ethereum’s immense trading liquidity and tight bid/ask spreads as compelling evidence it could enable proper market surveillance and oversight.

Respectfully Senators, the evidence points exactly the opposite way. We have discussed our analysis with SEC staff and would be happy to do the same for you and any other policy makers who have questions. 1/7 https://t.co/juFj4QyDnj

— paulgrewal.eth (@iampaulgrewal) March 15, 2024

This kind of statement jeopardizes the chance of the SEC reasoning favouring the spot Ethereum ETF filers. However, the crypto ecosystem remains partially hopeful. Grayscale’s move to amend Form 19b-4 underscores this ray of hope in the potential to get the much-anticipated approval.

Related Reading | Bitcoin Falls Below $68K, Leads to $811M in Crypto Liquidations