Hope Is Not Dead: Grayscale Continues to Apply for Ether ETF Amidst Skepticism

The asset manager expanded its commentary on market correlation and the creation and redemption of stocks.

Asset manager Grayscale Investments (Grayscale ) has proposed its intention to convert its Grayscale Ethereum Trust into a spot exchange-traded fund (ETF) by amending a regulatory filing.Bitcoin Miner

In the March 15 amendment, the company strengthened its previous filing in a number of ways. The updates support the argument that regulatory sharing in the CME ETH market is sufficient to protect the spot ETH market from fraud and manipulation.

The latest Shades of Gray amendment includes a correlation analysis conducted by Coinbase as evidence of sufficient market correlation, which found that the CME ETH futures market has been “consistently highly correlated” with the spot ETH market for approximately the past three years.ETChash Miner

The ratio is higher than the correlation between the CME bitcoin futures market and the spot bitcoin market found by the U.S. SEC.

The latest amendment to Shades of Gray also expands the discussion of the creation and redemption of ETF shares. Notably, this section describes only cash creation and redemption. Accordingly, it states that Authorized Participants cannot purchase, hold, deliver or receive ETH.

According to the filing, Grayscale Ether Trust now has $11.8 billion in assets under management (AUM), up from $4.8 billion previously. If the fund were converted to an ETF, it would unlock more than $1.73 billion in value, up from the previous estimate of $1.6 billion.

ETF Advocates at Shades of Gray

Craig Salm, chief legal officer of Grayscale, acknowledged the filing and emphasized the expected broad appeal of a spot ethereum ETF. He wrote on X that investors “want and deserve access to Ether in the form of a spot Ether ETF.”

Salm added that demand for Ether ETFs is “just as strong as spot Bitcoin ETFs.”

Market manipulation and creation/redemption methods had been major concerns prior to the approval of the spot Bitcoin ETF in January of this year. Shades of Gray’s latest amendment is critical because it addresses the same concerns in the context of the ethereum ETF.

The amendments to Shades of Gray were accompanied by a drop in expectations for regulatory approval. As of March 15, Polymarket puts the likelihood of the Ether ETF being approved by the end of May at just 26%.