Grayscale Investments unexpectedly withdrew its application for an Ethereum futures ETF just weeks before the U.S. Securities and Exchange Commission (SEC) decision deadline. The unexpected withdrawal suggests a possible shift in strategy, with Grayscale now seemingly focused on pursuing an XRP ETF.

Grayscale has withdrawn its 19b-4 application for an Ethereum Futures Trust ETF. The company originally filed on September 19, 2023, with the ETF intended to be listed on NYSE Arca, pending SEC approval. However, on May 7, 2024, Grayscale filed a withdrawal notice with the SEC. At least for now, it has abandoned its pursuit of an Ethereum futures ETF.

The History of Ethereum Futures ETF Application

On September 19, 2023, Grayscale filed a 19b-4 application to list its Ethereum Futures Trust as an ETF, sparking interest from investors and regulators.

The proposal, which was released for public comment on October 3, 2023, provides new opportunities for investors to interact with Ethereum through regulated futures products. After the SEC’s prescribed consideration period, a final decision is scheduled for May 30, 2024.

However, on May 3, 2024, Grayscale chose to withdraw its application, exiting the process entirely. The reasons for this decision are unclear, especially given the proximity to the SEC’s final ruling date. Analysts such as Bloomberg’s James Seyffart initially speculated that the ETF could serve as a strategic asset to gain approval for an Ethereum spot ETF.

Speculation and strategy shifts in ETF applications

Grayscale’s unexpected withdrawal comes amid the SEC’s broader deliberations on cryptocurrency ETFs, including several Ethereum spot ETF applications whose final decisions are set to be announced by the end of May 2024. James Seifert expressed confusion over Grayscale’s strategic retreat, especially as it coincides with the timeline of key SEC decisions on other cryptocurrency funds.

Grayscale’s withdrawal of its Ethereum futures ETF application suggests that the digital asset management company may be adjusting its strategy. Although the reasons behind it are unclear, some speculate that Grayscale may focus on other cryptocurrency-related products, such as an XRP-based ETF.

Sources familiar with the situation say Grayscale has begun applying for an XRP ETF, potentially capitalizing on the growing interest and adoption of the XRP Ledger and its native token.

The XRP Ledger’s scalability and low transaction fees have long been seen as potential advantages over other blockchain networks. If Grayscale’s XRP ETF receives regulatory approval, it could lead to increased institutional investment and mainstream adoption of the XRP token.