Grayscale to broaden its investment avenues with a new ETF.
Grayscale, a notable name in digital currency investments, has submitted an application to the US Securities and Exchange Commission (SEC) for a new Ether futures exchange-traded fund (ETF).
The company's announcement came on September 19th, adding momentum to the rapidly evolving cryptocurrency investment landscape.
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Grayscale's formal proposal outlines its intent to list and trade this new financial product under the New York Stock Exchange Arca Rule 8.200-E. It is worth noting that Grayscale Advisors, also named the "sponsor" in the filing, will manage the ETF.
The application reveals that Grayscale Advisors is in the process of securing registrations as a commodity pool operator with the Commodity Futures Trading Commission. Additionally, the company aims to become a National Futures Association member. To boost this venture, Grayscale has brought Videnct Advisory on board as a sub-adviser to act as the trust's commodity trading adviser.
In terms of operation, the Grayscale Ethereum Futures Trust plans to keep a stable expiration profile for its Ether futures contracts. Notably, the trust will not carry any future positions to cash settlement.
Unlike conventional Ether trusts, this futures-oriented ETF won't necessitate the involvement of an Ether custodian. Regarding the matter, the filing reads:
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 development comes on the heels of other investment firms like Valkyrie filing for Ether futures ETFs. Reports surfaced in mid-August suggesting that the SEC will soon greenlight the first batch of ETFs focused on Ether futures.
Last month, Grayscale made headlines by scoring a partial victory against the SEC when the appeal court approved Grayscale's request, forcing the SEC to reconsider the conversion of its over-the-counter Grayscale Bitcoin Trust into a spot Bitcoin ETF. The decision, while not guaranteeing the eventual listing of a Bitcoin spot ETF, has nevertheless been greeted with enthusiasm in the crypto community.
As the landscape of cryptocurrency investment options continues to evolve, Grayscale's latest move signifies a growing interest in diversifying the types of financial instruments available to investors.