Grayscale has amended a registration application it plans to convert Ethereum trust to a spot exchange-traded fund (ETF).
The company’s March 15 amendment strengthens the previous filing in several ways. The update supports the argument that sharing surveillance 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 performed 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 over the past three years.
The percentage is higher than the correlation the SEC found between the CME Bitcoin futures market and the spot Bitcoin market.
Grayscale’s amendment also elaborates on the creation and redemption of ETF shares. Notably, this section only describes cash creations and redemptions. Accordingly, it states that authorized participants cannot purchase, hold, deliver, or receive ETH.
According to the filing, Grayscale Ethereum Trust now owns $11.8 billion in assets under management (AUM) instead of $4.8 billion in AUM. Converting the fund to an ETF would free up more than $1.73 billion in value instead of the previously estimated $1.6 billion.
Grayscale argues for ETF
Craig SalmonGrayscale Chief Legal Officer acknowledged the filing and highlighted the expected broad appeal of spot Ethereum ETFs. He wrote on X that investors “want and earn 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 for spot Bitcoin ETFs.”
Market manipulation and creation/redemption methods were key concerns before spot Bitcoin ETFs received approval in January. Grayscale’s latest amendment is critical as it addresses the same issues in the context of Ethereum ETFs.
Grayscale’s amendment comes with declining expectations of regulatory approval. Polymarket estimates the chance of Ethereum ETF approval at the end of May at just 26% as of March 15.
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