Grayscale Seeks SEC Nod To Introduce ‘Mini’ Ethereum ETF

Grayscale Investments, the world’s largest cryptocurrency asset management firm, filed for its second prospective spot Ether exchange-traded fund (ETF) on April 23.

Dubbed the Grayscale Ethereum Mini Trust, the proposed fund would comprise a spin-off from the Grayscale Ethereum Trust (ETHE) — which the firm filed to convert into a spot Ethereum ETF in August.

The Mini Trust, which would trade under the ticker ETH, would be seeded with assets currently backing ETHE. Existing ETHE shareholders will also receive ETH shares on a pro-rata basis to keep the investors' existing levels of exposure to Ethereum consistent.

The Mini Trust would differ from ETHE by catering to longer-term investors and would offer lower fees to shareholders.

“We believe approval of Grayscale Ethereum Mini Trust would be a net positive for existing ETHE shareholders who stand to maintain the same exposure to Ethereum with the added benefit of a lower fee averaged across both products,” said Craig Salm, Grayscale’s chief legal officer.

If authorized, the Grayscale Ethereum Mini Trust would trade on the NYSE Arca exchange.

Grayscale also filed for a mini spot Bitcoin ETF that would be seeded with 10% of the shares from its spot Bitcoin ETF, GBTC, in March.

SEC delays verdict on Ethereum ETFs

The Ethereum community is currently awaiting May 23 with bated breath, with the date posing a make-or-break moment for Ether ETF applicants.

May 23 will mark the 240-day statutory deadline since the Volatility Shares filed for the first spot Ether application in August — which was quickly followed by applications from Bitwise, Grayscale, VanEck, Roundhill, and Proshares — with 240 days comprising the maximum allowable time for the SEC to deliver a verdict on the applications.

Analysts have long pointed to the date as the critical deadline for spot Ethereum ETF hopefuls, just as January 10 was the final cut-off for the recently approved cohort of spot Bitcoin ETFs.

On April 23, the SEC again delayed providing a decision on spot Ether ETF applications from Grayscale, BlackRock, and Franklin Templeton. While those deadlines were pushed back until June 23, James Seyffart, an ETF analyst at Bloomberg, reaffirmed that the SEC’s May 23 determination remains his primary focus concerning the spot Ether ETFs via tweet.

CoinShares reports capital withdrawal from crypto funds

Meanwhile, spot Bitcoin ETFs suffered heavy outflows last week, shedding $204.6 million to mark their second consecutive negative weekly performance. according to Sosovalue.

Data compiled by Coinshares shows crypto exchange-traded products (ETPs) shedding $206 million combined, with Bitcoin ETFs accounting for the lion’s share of outflows. The share of total Bitcoin trading volume represented by ETFs also slumped to 28% from 55% during the previous week.

James Butterfill, Head of Research at CoinShares, attributed the bearish momentum to expectations that the U.S. Federal Reserves will continue to maintain high interest rates.

"The data suggests appetite from ETP/ETF investors continues to wane, likely due to expectations that the Fed will maintain high interest rates longer than expected," Butterfill said.

However, BlackRock's IBIT ETF defied the downtrend to post a 69-consecutive-day streak of inflows leading up to the Bitcoin halving event.