Grayscale adjusts application: Convert Ethereum Trust into ETF

Grayscale has amended a regulatory filing through which the company plans to convert its Ethereum (ETH) Trust into a spot exchange-traded fund (ETF).

The company’s change on March 15 strengthens the previous filing in several ways. The update supports the argument that regulatory sharing within the CME ETH market is sufficient to protect against fraud and manipulation in the spot ETH market.

Grayscale’s latest change includes a correlation analysis conducted by Coinbase as evidence of sufficient market correlation. Previously reported by Cryptobenelux, Coinbase found that the CME ETH futures market has been “consistent and highly correlated” with the spot Ethereum market for approximately the past three years.

The correlation is higher than the correlation the SEC found between the CME Bitcoin (BTC) futures market and the spot Bitcoin market.

Grayscale’s change also expands on the creation and redemption of ETF shares. It is notable that this section only describes money creation and exchanges. It accordingly states that authorized participants cannot purchase, hold, deliver, or receive ETH.

According to the filing, Grayscale Ethereum Trust now holds $11.8 billion in assets under management (AUM) instead of $4.8 billion in AUM. Converting the fund into an ETF would unlock more than $1.73 billion in value instead of the previously estimated $1.6 billion.

Grayscale advocates ETF

Craig Salm, Grayscale’s Chief Legal Officer, acknowledged the filing and emphasized the expected broad appeal of spot Ethereum ETFs. He wrote at X that investors “want and deserve 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 it was for spot Bitcoin ETFs.”

Market manipulation and creation/redemption methods were major concerns before spot Bitcoin ETFs received approval in January. Grayscale’s latest change is vital as it addresses those same issues in the context of Ethereum ETFs.

Grayscale’s change comes amid declining expectations of regulatory approval from the likes of JPMorgan. Polymarket places the chances of Ethereum ETF approval by the end of May at just 26% as of March 15.