Grayscale Takes the Plunge: Files for Ether Futures ETF

Grayscale, a prominent digital currency investment company, has emerged as the latest contender to file with the U.S. Securities and Exchange Commission for an Ether futures exchange-traded fund

by Faruk Imamovic
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Grayscale Takes the Plunge: Files for Ether Futures ETF
© Getty Images News/Chris McGrath

Grayscale, a prominent digital currency investment company, has emerged as the latest contender to file with the U.S. Securities and Exchange Commission (SEC) for an Ether futures exchange-traded fund (ETF).

A New Offering in the Financial Landscape

On September 19th, Grayscale unveiled its proposal to list and trade shares of the Grayscale Ethereum Futures Trust ETF.

This is in accordance with the New York Stock Exchange Arca Rule 8.200-E, a standard by which certain entities can propose the trading of derivative securities products. Such a move aligns Grayscale with the provisions of the Securities Exchange Act of 1934, and further showcases its adherence to the recent rule change submitted by NYSE to the SEC.

Delving deeper into the administrative structure, Grayscale Advisors, who also goes by the moniker "sponsor" in official documentation, will be at the helm of managing this ETF. An interesting revelation from the document discloses: “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”.

Additionally, Grayscale Advisors has sought the expertise of Videnct Advisory, which will serve as the trust’s commodity trading adviser, further solidifying the fund's operational foundation.

Unique Features of Grayscale’s Ether ETF

While ETFs in themselves are not novel, Grayscale’s offering is designed with a unique twist.

The Grayscale Ethereum Futures Trust will target maintaining its Ether futures contracts with a "roughly constant expiration profile." More intriguingly, the trust has taken a firm stance against carrying futures positions all the way to their cash settlement.

Furthermore, this ETF won't necessitate the involvement of an Ether custodian. As the filing explicates, “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”. This aspect emphasizes the trust's commitment to financial accountability and security.

A Ripple Effect in the Industry

Grayscale's move follows in the footsteps of the digital asset management titan, Valkyrie, which too knocked on the SEC’s doors with an Ether futures ETF proposal in mid-August.

This succession of filings hints at a burgeoning trend. And it’s not just speculation; on August 17th, Bloomberg unveiled that the SEC is on the cusp of green-lighting the first ETFs rooted in Ether futures, injecting a wave of optimism into the Ethereum market.

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