Grayscale Forgoes Ethereum Tokens Post-Merge, Pursues ETH Futures Exchange-Traded Fund
Grayscale forgoes rights to post-Merge Ethereum PoW tokens due to lack of liquidity and custodian support.
Thu, 21 Sep 2023, 03:46 am UTC
The cryptocurrency investment company Grayscale made a definitive choice to forgo any entitlement to the Ethereum tokens that were post-Merge proof-of-work (ETHPoW). This decision was shared with the public on September 18. The company chose this course of action on behalf of those shareholders registered on the official date.
Grayscale's intensive analysis revealed that these ETHPoW tokens didn't achieve a significant liquid state. Moreover, the custodian for Grayscale's products doesn't back these particular tokens. In simpler terms, Grayscale found that it was unfeasible to buy or sell these ETHPoW tokens. Acting in the best interests of the shareholders from the official record date, Grayscale has chosen to relinquish their rights to these digital assets.
The context for this decision is rooted in Ethereum's pivotal shift, known as the Merge, which happened on September 15, 2022. This significant transition saw Ethereum move entirely from a proof-of-work (PoW) system to a proof-of-stake (PoS) system. Consequently, the Ethereum blockchain was split into a primary PoS version and a lesser-known PoW version.
Following this significant shift, Grayscale evaluated the feasibility of obtaining EthereumPoW and then trading ETHW on behalf of its shareholders. It wasn't a hasty decision. A full year after the Merge, they spent another half-year contemplating this step. The company's hesitation revolved around concerns about the digital asset custodians' and trading platforms' readiness to support these ETHW tokens.
Highlighting the industry's broader sentiment, other cryptocurrency investment firms, like the ETC Group, tried to introduce specific EthereumPoW exchange-traded products. Yet, a mere six weeks post-launch, ETC Group halted its PoW-centric ZETW ETP, pointing to a shortage of appropriate custody solutions.
In a related development, just a day after announcing the ETHW decision, Grayscale expressed its intentions to introduce a new Ether (ETH) futures exchange-traded fund. This initiative saw Grayscale approach the United States Securities and Exchange Commission, seeking approval to enlist and exchange shares of the Grayscale Ethereum Futures Trust (ETH) ETF under the guidelines of the New York Stock Exchange Arca Rule 8.200-E on September 19.
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