US Court issues mandate for Grayscale ruling, paving way for SEC to review spot Bitcoin ETF

October 23, 2023 Coin Telegraph

The court decision was expected by many after the SEC did not appeal an Aug. 29 ruling requiring Grayscale's Bitcoin ETF application to be reviewed.

The United States Court of Appeal has issued a mandate following a decision requiring Grayscale Investments application for a spot Bitcoin exchange-traded fund to be reviewed by the Securities and Exchange Commission (SEC).

In an Oct. 23 filing in the U.S. Court of Appeals for the District of Columbia Circuit, the “formal mandate” of the court took effect, paving the way for the SEC to review its decision on Grayscale’s spot Bitcoin (BTC) exchange-traded fund, or ETF. The mandate followed the court’s initial ruling on Aug. 29 and the SEC failing to present an appeal by Oct. 13.

*Oct. 23 filing in U.S. Court of Appeals for the District of Columbia Circuit. Source: Courtlistener*

The Oct. 23 mandate reaffirmed the court’s Aug. 29 ruling, giving Grayscale a second bite at the apple in converting its Bitcoin Trust (GBTC) into a listed BTC ETF. To date, the SEC has never approved a spot crypto ETF for listing on U.S. exchanges, but has given the green light to investment vehicles linked to BTC and Ether (ETH) futures.

On Oct. 19, Grayscale submitted a registration statement to the SEC to list shares of its Bitcoin Trust on the New York Stock Exchange Arca under the ticker symbol GBTC. The investment firm, along with major companies including BlackRock, ARK Investment, and Valkyrie have spot crypto ETF applications pending with the SEC.

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SEC reportedly wont appeal court decision on Grayscale Bitcoin ETF

October 14, 2023 Coin Telegraph

Coin Telegraph

If true, the SEC will need to review and make a decision on Grayscale's spot Bitcoin ETF application. If denied, Grayscale could appeal the decision.

The U.S. Securities and Exchange Commission reportedly has no plans to appeal the recent court decision that favored Grayscale Investments. The ruling requires the SEC to review the firm’s spot Bitcoin (BTC) exchange-traded fund application.

Benzinga (and others) reporting that Reuters is reporting that the SEC will NOT be appealing Grayscale case. pic.twitter.com/yd9BBtRwv5
— Eric Balchunas (@EricBalchunas) October 13, 2023

The SEC’s supposed decision not to appeal the D.C. Circuit Court of Appeal’s ruling was highlighted in an Oct. 13 report from Reuters, which cited “a source familiar with the matter.”

Bloomberg analysts also expect the SEC not to appeal to the Supreme Court but emphasized that this doesn’t necessarily mean Grayscale’s application is set to be approved.

If the reports are true, the SEC will need to follow the court’s August order and review Grayscale’s application to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

According to Reuters, the appeals court is expected to issue a mandate specifically outlining how its ruling should be “executed” by the SEC.

Commenting on the developments, Bloomberg ETF analyst James Seyffart noted via X that:

“I do not think they will appeal to the Supreme Court either. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after?”

1. Done deal I guess if this is accurate. No en banc application

2. No. I do not think they will appeal to the Supreme Court either.

3. Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after? https://t.co/2EayzqeKGq
— James Seyffart (@JSeyff) October 13, 2023

Moving forward, Seyffart suggested that it is likely that “we will find out in the next week (or two)” what the deadline is for the SEC to approve or deny Grayscale’s spot BTC ETF application.

If the SEC were to deny the application, Grayscale could then appeal that decision, dragging the process out even longer.

As it stands, around seven spot Bitcoin ETF applications have been put before the SEC that are awaiting a decision from the regulator.

In a separate preceding X post on Oct. 13, Seyffart reiterated his view that there is a 90% chance that a spot Bitcoin ETF application will get approved in January 2024, specifically the application from Cathie Wood’s ARK Invest.

I've gotten a lot of questions regarding my current view on Spot #Bitcoin ETFs over the last couple weeks. This is the first section of the note I put out yesterday with @EricBalchunas.

TLDR: Our view hasn't changed much https://t.co/dRAm5IsdQf pic.twitter.com/Htsi3n2XxV
— James Seyffart (@JSeyff) October 13, 2023

Seyffart and Bloomberg’s senior ETF analyst Eric Balchunas, also previously suggested that there is a 75% chance that an application will get approved in 2023.

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What happens if SEC doesn’t appeal Grayscale spot Bitcoin ETF ruling?

October 13, 2023 Coin Telegraph

Appeal

The SEC must appeal Grayscale’s win in a D.C. Appeals Court on Oct. 13, or it will have to approve — or try to delay — the firm’s Bitcoin ETF bid.

The United States Securities and Exchange Commission will soon reach its deadline to appeal the court decision that ruled in favor of Grayscale Investments, forcing the regulator to review the fund manager’s application for a spot Bitcoin (BTC) fund.

While many observers don’t believe the securities regulator will attempt to appeal the court’s decision, analysts say there could still be ways for the SEC to delay approval of Grayscale’s spot Bitcoin ETF conversion.

On Oct. 13, the SEC must either appeal the D.C. Circuit Court of Appeals decision to the U.S. Supreme Court, request the Appeals Court revisit its ruling, or follow the court’s August order and review Grayscale’s bid to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

In an Oct. 12 post responding to an X user's question, Bloomberg ETF analyst Eric Balcunas said an appeal was unlikely, though there could still be other hurdles happening.

“We think [an] appeal is a longshot [...] But there’s always a chance of something else happening.”

Meanwhile, in a separate post, fellow Bloomberg ETF analyst James Seyffart said that an SEC attempt to deny on new grounds was unlikely and a “very difficult needle to thread” but it could “find ways to keep delaying.”

Not officially. SEC could attempt to deny on new grounds but as @EricBalchunas, myself, @NYCStein, @SGJohnsson, @NateGeraci and many others have said. It would be a very difficult needle to thread and we view as unlikely. They can find ways to keep delaying though IMO.
— James Seyffart (@JSeyff) October 12, 2023

A September note from law firm Ropes & Gray warned the GBTC application could be sent back for review to the SEC, giving the regulator another chance to reject it on a different basis.

“In this scenario, the new denial could itself then be subject to another appeal by GBTC to the D.C. Circuit,” wrote the firm.

Another delay scenario, according to Ropes & Gray, would be if the New York Stock Exchange has to make a new filing to list GBTC — then it is possible the SEC could take up to eight months to reach a decision on the ETF.

Currently, at least seven spot Bitcoin ETF applications are before the regulator for approval.

Despite all being filed with the regulator earlier in 2023, all have faced delays and pushbacks from the SEC leaving the final approval deadlines for most around March 2024 or later.

However, most eyes are on Grayscale’s spot Bitcoin ETF conversion application because if the SEC approves it — the regulator could struggle to find reasons to knock back other applications.

The likelihood of an approved spot Bitcoin ETF this year is 75%, according to Bloomberg analysts who updated the odds after Grayscale’s court win. The odds jump to a 95% likelihood of approval by the end of 2024.

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Grayscale submits SEC filing to convert Ethereum Trust to spot ETF

October 2, 2023 Coin Telegraph

Coin Telegraph

Crypto asset manager Grayscale has filed an application with the U.S. SEC to convert its Ethereum Trust to a spot Ethereum ETF.

Following the approval of the first Ether (ETH) futures exchange-traded fund (ETF), Grayscale Investments is looking to convert its Grayscale Ethereum Trust to a spot Ether exchange-traded fund (ETF).

The New York Stock Exchange Arca filed for the conversion with the United States Securities and Exchange Commission (SEC) on Oct. 2. Grayscale’s existing trust invested in Ether futures contracts as an indirect means of exposure to ETH, but a spot ETF will invest in the underlying asset itself.

@Grayscale has filed to convert Grayscale Ethereum Trust to a spot ETF. $ETHE

Thank you for your continued support -- our team is just getting started! https://t.co/3nNtfe4Nns
— Sonnenshein (@Sonnenshein) October 2, 2023

Grayscale CEO Michael Sonnenshein announced the move on X (formerly Twitter) and highlighted the firm’s intent to provide conventional investment products offering exposure to cryptocurrency assets:

“As we file to convert ETHE to an ETF, the natural next step in the product’s evolution, we recognize this as an important moment to bring Ethereum even further into the U.S. regulatory perimeter.”

The Grayscale Ethereum Trust was launched in March 2019 and went on to become an SEC reporting company in October 2020, giving the public direct insight into the performance of its cryptocurrency investment vehicle.

At the time of writing, the Ethereum Trust is valued at $4.9 billion and accounts for around 2.5% of circulating ETH. Grayscale also reports that 250,000 investor accounts have exposure to the trust.

Grayscale also indicated that it remains committed to taking its cryptocurrency products through an “intended four phase lifecycle” ending with a conversion to an ETF. The platform currently offers 17 different cryptocurrency investment products.

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

Ether the Ether: VanEck releases two ETF ads ahead of possible Monday launch

September 29, 2023 Coin Telegraph

ARK 21Shares

Once Ethereum futures ETF and spot Bitcoin ETF applications get approved, there will be a marketing war like we've never seen says, Bloomberg ETF analyst Eric Balchunas.

Investment manager VanEck has fired up the marketing engine for its “upcoming” Ethereum futures exchange-traded fund (ETF), which some analysts expect could be launched as early as Oct. 2.

On Sept. 28, VanEck released the two “Enter the Ether” themed TV commercials, revealing that its Ethereum Strategy ETF — tickered EFUT — is “coming soon.”

AI, AI, Uh Oh! Follow for updates on how to Enter the Ether. pic.twitter.com/wM69nVtbWC
— VanEck (@vaneck_us) September 28, 2023

The commercials came on the same day VanEck published a press statement about its upcoming EFUT, stating it will be listed on the Chicago Board Options Exchange and be managed by Greg Krezner, VanEck’s Head of Active Trading.

Bloomberg ETF analysts Eric Balchunas and James Seyffart believe the TV ads could hint that Ethereum futures ETFs are “happening sooner than expected.”

Seyffart expects VanEck’s new ETF to launch on Monday despite a Sept. 29 document stating it won’t take effect for another 60 days. “Our understanding is that the SEC is accelerating approvals for these things,” he said.

Quick correction: they actually won't be effective until Friday. Still, same result: Monday launch.
— Eric Balchunas (@EricBalchunas) September 28, 2023

Enter the Ether

The first of VanEck’s “Enter the Ether” advertisements is a rather short and quirky 15-second video featuring five actors looking at the camera with a deadpan expression and strange alien-sounding music in the background.

“Ethereum. Now in an ETF form. Coming soon,” says an actor.

“Oh and HODL or Fork Off,” says another actor, before the “Enter the Ether” message appears and the ad ends.

The second ad appears more straightforward, with a 30-second spot suggesting that a “shift” is coming soon and that Ethereum’s gravitational pull “will draw everyone in.”

When you’re ready, ENTER THE ETHER. The VanEck Ethereum Strategy ETF ($EFUT) is coming soon. Read our press release: https://t.co/4QPOVd5nB2 pic.twitter.com/vSF3HzMuvC
— VanEck (@vaneck_us) September 28, 2023

Balchunas expects more marketing efforts from ETF issuers as ETFs get approved, particularly when spot Bitcoin ETFs get the greenlight.

“It will be a marketing war like we've never seen since they all do same thing and launch on same day. Unprecedented.”

Meanwhile, financial services firm Valkyrie told Cointelegraph that it will also soon begin offering exposure to Ether through its existing Bitcoin Strategy ETF — making it one of the first firms to do so amid several pending applications with the U.S. Securities and Exchange Commission.

On Sept. 28, Seyffart said in an X post that it was “looking like the SEC is gonna let a bunch of Ethereum futures ETFs go next week potentially,” spurred by a potentially imminent U.S. government shutdown.

There are 15 Ether futures ETFs from nine issuers vying to launch.

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Grayscale files for new Ether Futures ETF: Official

September 20, 2023 Coin Telegraph

Coin Telegraph

Grayscale debuted its first two Ethereum futures contracts in 2021, and is now planning to launch the new Grayscale Ethereum Futures Trust ETF.

Digital currency investment company Grayscale is the latest firm to file for a new Ethereum futures’ exchange-traded fund (ETF) with the Securities and Exchange Commission (SEC).

Grayscale on Sept. 19 officially proposed to list and trade shares of the Grayscale Ethereum Futures Trust (ETH) ETF under the New York Stock Exchange (NYSE) Arca Rule 8.200-E.

The proposal is pursuant to the provisions of the Securities Exchange Act of 1934 and rule change submitted by NYSE to the SEC. The ETF is managed by Grayscale Advisors, also referred to as the “sponsor” in the filing.

“The Sponsor is in the process of becoming registered as a commodity pool operator with the Commodity Futures Trading Commission and is in the process of becoming a member of the National Futures Association,” the document reads. It also states that Grayscale Advisors has engaged Videnct Advisory as subadviser, to serve as the trust’s commodity trading adviser.

The Grayscale Ethereum Futures Trust seeks to maintain its holdings in Ether futures contracts with a “roughly constant expiration profile,” the filing reads, adding that it will “never carry futures positions all the way to cash settlement.”

The nature of the Ether futures contracts in the ETF will not require the trust to use an Ether custodian, the filing reads, adding:

"The trust will deposit an initial margin amount to initiate an open position in futures contracts. A margin deposit is like a cash performance bond. It helps assure the trader’s performance of the futures contracts that he or she purchases or sells.”

The latest filing mentions that Grayscale currently offers two Ethereum futures contracts, with one representing 50 Ether and referred to as “ETH contracts”, and another contract representing 0.1 Ether and known as Micro Ether Futures, or MET contracts.

ETH contracts started trading on the Chicago Mercantile Exchange (CME) Globex trading platform on Feb. 8, 2021 under the ticker symbol “ETH” and are cash-settled in U.S. dollars. MET contracts began trading on the CME Globex trading platform on Dec. 6, 2021 under the ticker symbol “MET” and are also cash-settled in U.S. dollars.

The news comes a few weeks after the digital asset management firm Valkyrie also filed for an Ether futures ETF with the SEC in mid-August, following a dozen of other firms filing for ETH futures ETFs. On Aug. 17, Bloomberg reported that the SEC was set to allow the first ETFs based on Ether futures, spurring a lot of optimism on the Ethereum market.

Last month Grayscale scored a major, though partial, victory against the SEC in its efforts to convert its over-the-counter Grayscale Bitcoin Trust (GBTC) into a listed Bitcoin exchange-traded fund (ETF). The SEC had rejected its GBTC application, after which Grayscale sued. The appeals court ordered that Grayscale’s petition for review be granted and the SEC’s order to deny the GBTC listing application be vacated. This victory, despite not guaranteeing the eventual listing of a Grayscale spot Bitcoin ETF, was still greeted with enthusiasm by the community.

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Grayscale officially abandons post-Merge PoW Ethereum tokens

September 20, 2023 Coin Telegraph

Coin Telegraph

One year after the Ethereum Merge, Grayscale has finally taken a decision to abandon all the rights to proof-of-work Ethereum tokens.

Major cryptocurrency investment firm Grayscale has finally taken a decision to abandon all the rights to the post-Merge proof-of-work (PoW) Ethereum tokens (ETHPoW).

Announcing the news on Sept. 18, Grayscale said that the firm has “irrevocably abandoned” all the rights to ETHPoW tokens on behalf of the record date shareholders of each product.

After thorough review, Grayscale determined that the ETHPoW tokens have not developed meaningful liquidity, while the products’ custodian doesn’t support such tokens. The firm wrote:

“As such, it is not possible to exercise the rights to acquire and sell the ETHPoW tokens, and on behalf of the record date shareholders, Grayscale is abandoning the rights to these assets.”

Grayscale’s decision to drop the rights for ETHPoW tokens comes more than a year after the Ethereum Merge, an event that marked Ethereum’s full transition from PoW to proof-of-stake (PoS). The Merge occurred on Sept. 15, 2022, forking the Ethereum blockchain into main PoS-based Ether (ETH) and minor PoW-based EthereumPoW (ETHW) tokens.

In the aftermath of the Merge, Grayscale was considering whether the company should acquire EthereumPoW and sell ETHW on behalf of the record date shareholders. 180 days after the Merge, the company took another six months to make a decision on whether to acquire those PoW tokens, citing uncertainty regarding the support of ETHW tokens by digital asset custodians and trading venues.

Unlike Grayscale, some cryptocurrency investment firms like ETC Group have attempted to launch dedicated EthereumPoW exchange-traded products (ETPs). ETC Group eventually terminated its PoW-based ZETW ETP just six weeks after the launch, citing the absence of eligible custody providers.

The news on Grayscale’s ETHW decision came one day before The Wall Street Journal reported that the firm has launched a new Ether futures exchange-traded fund, citing a filing with the Securities and Exchange Commission. Cointelegraph hasn’t been able to locate a related SEC filing online. Grayscale did not immediately respond to Cointelegraph’s request for comment.

Grayscale

Enter the Ether

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