Digital asset management firm Grayscale continues to expand its tentacles into exchange-traded funds (ETFs). In a Monday report, the investment company and NYSE Arca announced the submission of Form 19b-4 to the United States Securities and Exchange Commission (SEC), requesting the conversion of its Ethereum Trust (ETHE) into spot Ethereum ETFs.
The latest announcement comes on the heels of Grayscale’s recent foray into ether futures ETFs.
ETHE to Spot Ethereum ETF
Grayscale Ethereum Trust is an investment vehicle that tracks the price of the second-leading cryptocurrency, Ethereum. Launched in March 2019, Grayscale ETHE has grown to be the largest Ether-focused investment product in the financial market with nearly $5 billion in assets under management (AUM) and million-dollar worth of shares trades in daily volume.
According to its latest press release, Grayscale intends to transition its digital asset products into ETFs through a four-phase lifecycle.
Grayscale’s CEO, Michael Sonnenshein, commented:
“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.”
Like Grayscale, several investment firms are actively taking steps to gain the SEC’s approval to offer ether-based ETFs to investors. Some of these companies include Bitwise, VanEck, and Proshares.
Flight to ETFs Continue
A regulated ETF is a financial product designed to enable institutional investors to gain exposure to a cryptocurrency without experiencing the difficulty of custodying the asset directly. In recent times, the quest for approved ETFs has increased.
Currently, several investment companies have filed for financial products like spot Bitcoin ETFs, Futures Bitcoin ETFs, spot Ethereum ETFs, and Futures Ethereum ETFs. While the U.S. SEC has given its approval for the offering of futures-based ETFs, the agency is yet to endorse a spot-based ETF.
Unlike futures-based products, a spot Bitcoin ETF or spot Ethereum ETF requires that an investment company purchase the underlying asset to back issued shares.
In August, Grayscale received the green light from a U.S. federal court to offer a spot Bitcoin ETF. However, the SEC has yet to give any approval for the trading of the financial product.
