Grayscale Seeks SEC Approval for Ethereum ETF Conversion in Partnership with NYSE Arca

By Tsunami 10/2/23 1:16 PM

Grayscale Investments, the world’s largest crypto asset manager, has announced its intent to convert its Grayscale Ethereum Trust (ETHE) into a spot Ethereum Exchange-Traded Fund (ETF). This move is in collaboration with NYSE Arca, a leading U.S. stock exchange, and has been officially initiated with the filing of Form 19b-4 with the U.S. Securities and Exchange Commission (SEC), as revealed in a press release on Monday.

Grayscale Investments has long been a pioneer in offering cryptocurrency investment products, catering to institutional and retail investors alike. The decision to convert its Ethereum Trust into an ETF signals the company’s commitment to providing transparent and regulated access to digital assets within the framework of traditional financial instruments.

Grayscale CEO Michael Sonnenshein emphasized the company’s dedication to ensuring familiar and secure investment avenues for crypto enthusiasts. He stated, “At Grayscale, our unwavering commitment is to offer investors transparent and regulated access to crypto through product structures that are familiar. 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.”

The timing of this announcement is noteworthy, as it follows the recent SEC clearance of the first Ethereum futures ETFs, indicating a growing acceptance of cryptocurrency-related investment products within the regulatory landscape.

Grayscale’s decision to convert its Ethereum Trust into an ETF aligns with the company’s established strategy of shepherding its digital asset products through a four-phase lifecycle, with the fourth and final stage being the conversion to an ETF. ETHE, which launched in March 2019, received a public quotation in May 2019, and voluntarily became an SEC reporting company in October 2020, has grown to become the largest Ether investment vehicle globally, managing nearly $5 billion in assets. This represents approximately 2.5% of all Ether currently in circulation. Furthermore, ETHE’s shares trade in daily volumes worth millions of dollars and are held by over a quarter of a million American investor accounts.

David LaValle, Grayscale Global Head of ETFs, expressed his enthusiasm for this latest milestone. “This filing is another important milestone as Grayscale continues to build its best-in-class ETF team, product suite, and capabilities – serving investors as a globally respected asset manager with unmatched crypto expertise,” he said. LaValle also noted the pride in partnering with NYSE Arca on this endeavor and the anticipation of engaging with the SEC on the next steps in the conversion process.

It’s important to note that the term “ETF” is used generically in this context, encompassing exchange-traded investment vehicles subject to the Investment Company Act of 1940, as well as other exchange-traded products that do not require registration under the ’40 Act.

The filing of Form 19b-4 with the SEC represents a crucial step in Grayscale’s ongoing efforts to bridge the gap between the cryptocurrency world and traditional financial markets. If approved, the conversion of Grayscale Ethereum Trust into a spot Ethereum ETF would provide investors with another avenue to gain exposure to the increasingly popular Ethereum cryptocurrency while benefiting from the regulatory safeguards associated with traditional investment vehicles.

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