Grayscale has announced its intention to convert its Ethereum Trust (ETHE) into a spot exchange-traded fund (ETF).
The crypto asset investment product stated on October 2nd that the New York Stock Exchange Arca has filed Form 19b-4 with the U.S. Securities and Exchange Commission (SEC) to convert its Ether Trust into a spot ETF.
This filing comes after the SEC’s approval of several Ethereum futures ETFs.
Grayscale CEO Michael Sonnenshein expressed that this move further demonstrates the firm’s commitment to providing investors with transparent and regulated access to crypto through familiar product structures. He stated:
“As we file to convert ETHE to an ETF, the natural next step in the product’s evolution, we recognize this as an important moment to bring Ethereum even further into the U.S. regulatory perimeter.”
Grayscale Ethereum Trust was launched in March 2019 and has become one of the largest Ether investment vehicles globally. According to its website, the fund’s assets under management are approximately $5 billion, representing 2.5% of all Ether in circulation.
Most recently, Grayscale achieved a significant victory over the SEC due to the regulator’s reluctance to approve the transition of its Grayscale Bitcoin Trust (GBTC) into an ETF.
Similar to GBTC, Grayscale’s ETHE trades at a considerable discount to the net asset value (NAV), which currently sits around 31% according to Coinglass data.
The ETHE discount reached its highest point near 60% in January and has mostly remained at around 40-50% throughout the year. However, the metric started to decline notably after BlackRock submitted its application for a Bitcoin spot ETF in June. The decline continued and reached its lowest level in a year following Ark Invest’s application for an Ethereum spot ETF in early September.
Currently, Grayscale’s ETHE configuration does not support redemptions, which contributes to its trading discount. However, the proposed transition from a trust to an ETF, which allows share redemptions, could potentially eliminate this discount.
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