Grayscale amended a regulatory filing through which it intends to convert its Ethereum Trust to a spot exchange-traded fund (ETF).
The company’s March 15 amendment strengthens its earlier filing in multiple ways. The update supports the argument that surveillance sharing within the CME ETH market is sufficient to protect against fraud and manipulation in the spot ETH market.
Grayscale’s latest amendment includes a correlation analysis conducted by Coinbase as evidence of sufficient market correlation. Coinbase found that the CME ETH futures market has been “consistently and highly correlated” with the spot Ethereum market for roughly the past three years.
The rate is higher than the correlation that the SEC found between the CME Bitcoin futures market and the spot Bitcoin market.
Grayscale’s amendment also expands on the creation and redemption of ETF shares. Notably, this section describes only cash creations and redemptions. It accordingly states that authorized participants cannot purchase, hold, deliver, or receive ETH.
According to the filing, Grayscale Ethereum Trust now holds $11.8 billion in assets under management (AUM) instead of $4.8 billion of AUM. The conversion of the fund to an ETF would unlock over $1.73 billion of value instead of the $1.6 billion previously estimated.
Grayscale advocates for ETF
Craig Salm, Grayscale’s Chief Legal Officer, acknowledged the filing and emphasized the expected broad appeal of spot Ethereum ETFs. He wrote on X that investors “want and deserve access to Ethereum in the form of a spot Ethereum ETF.”
Salm added that the case for an Ethereum ETF “is just as strong as it was for spot Bitcoin ETFs.”
Market manipulation and creation/redemption methods were key concerns before spot Bitcoin ETFs gained approval this January. Grayscale’s latest amendment is vital as it addresses those same issues in the context of Ethereum ETFs.
Grayscale’s amendment comes alongside declining expectations of regulatory approval. Polymarket places the odds of Ethereum ETF approval by the end of May at just 26% as of March 15.
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