Grayscale Investment, an American cryptocurrency asset management giant, recently announced a surprising move. The company has withdrawn its application for an Ethereum (ETH) futures exchange-traded fund (ETF).

The decision came just weeks before a mandatory ruling by the securities regulator. It has also sparked considerable discussion within financial and crypto circles.

Decoding Grayscale’s ETF Application Pullback

Grayscale filed the notice to withdraw the Grayscale Ethereum Futures Trust with the United States Securities and Exchange Commission (SEC) on May 7, 2024. The company initially submitted its application on September 19, 2023, aiming for a New York Stock Exchange (NYSE) listing.

This abrupt decision has raised speculation about potential private discussions between the company and the SEC. While unsure about the withdrawal’s motives, James Seyffart, an ETF analyst at Bloomberg Intelligence, suggested the filing might have been a strategic move.

Read more: Ethereum ETF Explained: What It Is and How It Works

“This is interesting […] [Ethereum Futures ETF] was essentially a trojan horse filing in my view, in order to create the same circumstances that allowed Grayscale to win the GBTC lawsuit (approve futures deny spot). I don’t know why they’d do this honestly. In my mind might as well make the SEC write up an approval or denial for an ETH futures ETF and go from there? Maybe the SEC spoke with Grayscale about this… And whatever was said convinced Grayscale to withdraw? (This is a complete guess),” Seyffart speculated.

Speculations also come from a crypto community member who suggested that Grayscale’s withdrawal was due to the likelihood of the SEC approving the spot Ethereum ETFs on May 23. However, Seyffart humorously dismissed it.

“Hahaha. 1. I do not think that’s gonna happen (though odds aren’t zero). So, I do think it was something else. 2. That said—honestly—that’s one of the very few reasons that I’d voluntarily withdraw this if I were Grayscale,” he explained.

Despite cryptocurrencies becoming increasingly recognized as viable investment assets, the likelihood of an SEC approval for spot Ethereum ETFs is viewed pessimistically. Analysts like Seyffart and Eric Balchunas, along with industry figures like Jan van Eck and MicroStrategy’s Michael Saylor, share this pessimistic view.

Read more: How to Invest in Ethereum ETFs?

The SEC’s recent decision to delay the review of Galaxy Invesco’s Ethereum ETF application reinforces this sentiment. The delay of an additional 60 days extends the uncertainty in the market until at least July 5. Nonetheless, there is keen anticipation for the SEC’s decisions on the spot Ethereum ETF filings from VanEck and ARK, set for May 23 and May 24, respectively.