Grayscale Updates S-3 Filing for Upcoming Ethereum ETF

On May 30, Grayscale submitted the final S-3 filing for its Ethereum spot ETF, just one day after BlackRock announced the S-1 filing. It is expected that in the next few days, more registration documents will be filed with the SEC.

Crypto asset management firm Grayscale has quickly updated the S-3 filing for its Ethereum spot ETF, just one day after BlackRock submitted its final S-1 filing, as Coin68 reported. reported.

The S-3 filing, filed by Grayscale with the SEC after meeting the necessary standards, is a cleaner and less detailed version than the S-1 filing. This helps speed up the SEC's review process, allowing Grayscale's Ethereum spot ETF to be listed on the exchange faster than other competitors.

The reason Grayscale chose to file an S-3 instead of an S-1 is because the company has applied to convert the Grayscale Ethereum Trust (ETHE) fund into an Ethereum spot ETF from October 2023. It was not until the end of May this year that the SEC approved Ethereum ETF proposals based on 19b-4 filings so that Grayscale could continue to complete the preparations for listing.

Based on the submitted S-3 filing, Grayscale has determined the conversion rate between ETH and stocks. To issue 100 shares for Grayscale's Ether spot ETF would require 0.94552590 ETH as of May 28, 2024.

In the S-3 filing, Grayscale emphasized that Ethereum can be considered a commodity. The company said:

“The SEC has not issued any specific regulations regarding whether Ethereum is considered an asset or a security. However, the move to approve Ethereum ETF proposals for future stock listings could imply that the SEC considers Ether a commodity.”

According to TheBlock, the SEC is expected to receive more applications as it requires Ethereum spot ETF issuers to submit a preliminary draft of the S-1 filing by May 31.

In another development, Bitcoin spot ETFs in the US recorded cash flow for 13 consecutive days, earning a total of 48.71 million USD on the trading day of May 30.

According to data from Farside Investor, Fidelity's FBTC fund is leading with the highest net inflow at $119 million. Meanwhile, Ark's ARKB fund recorded a record amount of withdrawals, amounting to nearly 100 million USD. Grayscale's Bitcoin spot ETF GBTC has just had its fifth day of trading without cash flow.

Unlike the other 9 ETF funds from BlackRock or Fidelity that were completely new, Grayscale's ETF was converted from one of the company's key products, Grayscale Bitcoin Trust (GBTC) and was approved by the SEC. upgrade” to become Bitcoin ETF in January 2024.

In Kaiko's May 27 report, 23% of Grayscale Bitcoin Trust (GBTC) assets, equivalent to $6.5 billion, flowed out of the fund in the first month since its launch on January 11. /2024.

The above scenario can be repeated with the Ethereum ETF Grayscale Ethereum Trust - ETHE. The fund currently manages assets worth $11 billion. According to Kaiko, if the fund has an outflow similar to GBTC, this number could reach 110 million USD in outflows from the ETHE fund on average per day, equivalent to 30% of the average daily trading volume of ETH on the exchange. Coinbase.

Over the past 3 months, Grayscale's ETHE stock price is trading up to 26% lower than the underlying asset ETH. Therefore, Kaiko experts believe that it is completely reasonable that ETHE witnessed outflow and The conversion pressure from users as this difference is increasingly reduced. NAV is the value of the fund's assets, calculated by subtracting the total value of liabilities from the total asset value.

After "upgrading" to a spot ETF, the difference between GBTC and the actual price of BTC has narrowed significantly, although before that, the difference was up to 17%. Many investors tend to withdraw GBTC to Preserve price or sell for a more favorable price.

According to YCharts, the difference between GBTC and Bitcoin price has decreased to only 0.03% and has remained stable at this level for a long time since the Bitcoin ETF was approved.

On May 1, ETHE was trading at a premium of more than 25%, before gradually falling amid speculation that the SEC would approve Ethereum spot ETFs. However, data from YCharts shows that the fund quickly reached a gap of 1.28% on May 24, when the SEC officially approved Ethereum spot ETFs.

Also according to Kaiko's report, ETH saw its most recent volatility on May 22, increasing from 60% to nearly 90% before decreasing over the weekend.

The drastic change in ETH investor sentiment is also evident through the derivatives market. In just three days, funding rates for perpetual futures contracts have jumped from their lowest in more than a year to their highest in months.

Kaiko analysts also emphasized that GBTC's outflow was also "surpassed" by the inflow volume into other Bitcoin ETFs at the end of January 2024.

Kaiko concludes that even if the Ether ETF sees short-term outflows, SEC approval is still significant for ETH as an asset class, eliminating an uncertain regulatory approach, which has impacted to the growth of the Ethereum ecosystem over the past year.