Due to growing regulatory scrutiny in the United States, two well-known cryptocurrency asset managers, Grayscale Investments and Bitwise Asset Management, have postponed their intentions to introduce an Ether futures exchange-traded fund (ETF).
On May 17th, Grayscale amended their SEC filing to exclude mentions of an Ether futures ETF. This modification was made shortly after they revealed their plans to provide a number of ETF products, including a semi-spot Bitcoin ETF and a privacy-focused ETF that invests in blockchain startups and digital assets.
The choice to put an end to the preparations for an Ether futures ETF is a reflection of the difficult regulatory landscape that surrounds crypto ETFs in the US. The SEC has been closely examining such offers, but it hasn’t yet given the go-ahead for any crypto ETFs in the nation.
Despite being a setback for Grayscale and Bitwise, the postponement highlights the need for regulatory clarification and approval procedures for cryptocurrency investment products. Market participants and regulators will have to work through these challenges as the industry develops in order to give investors more regulated and accessible investing options.
In response to the SEC’s allegations, Grayscale Investments has argued that the underlying asset, Ether, does not meet the requirements to be categorized as a security. The company intends to swiftly give the SEC staff an explanation of the legal justification for its position.
However, Bitwise has made the decision to completely withdraw its application for an Ether-based futures ETF. The asset management claimed in its amendment filing with the SEC on May 17 that it does not intend to pursue the fund’s effectiveness and that no fund securities were or will be sold under the aforementioned amendment.
The steps taken by Grayscale and Bitwise highlight the difficulties and obstacles associated with getting regulatory clearance for cryptocurrency ETFs.
As the SEC continues its scrutiny of crypto ETF proposals, it highlights the ongoing need for regulatory clarity and a comprehensive framework that addresses the unique characteristics of digital assets.
A Bitcoin-based futures ETF debuted in the Q4 of 2021, making many in the crypto industry believe that a spot crypto ETF is on the way.