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.