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Grayscale Investments will focus on converting its Ethereum trust the worlds largest to spot exchange-traded products, CEO Michael Sonnenshein said on Wednesday.

At Grayscale we decided to focus our energy on our spot products. Thats really core to our DNA, he said during an event in London that was hosted by the Financial Times.

On Tuesday, media reported that the crypto-native asset manager had withdrawn its application to the Securities and Exchange Commission to provide an Ether futures ETF.

It had filed the application in October.

Sonnenshein said the asset manager was withdrawing the application because a number of futures products are already available for investors.

As DL News has reported, VanEcks EFUT and ProShares EETH dominate the brutally competitive Ethereum ETF field, accounting for over 90% of total trading volume at launch.

Sometimes we will file for a product. That doesnt necessarily mean its going to come to market, Sonnenshein said

Grayscale paved the way for the approval of Bitcoin spot ETFs by winning a legal case against the SEC that allowed it to convert its Bitcoin Trust to an ETF.

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The SEC granted Grayscales application plus 10 others from various asset managers, including BlackRock and Fidelity Investments in January

Since the wild success of these funds, which have seen almost $12 billion in net inflows, attention has turned to the approval of spot Ethereum products.

Grayscale, along with BlackRock, VanEck, ARK Invest, Fidelity, Invesco, and Hashdex, has applied to convert its Ethereum trust to a spot ETF.

The industry will know what the SEC is thinking when the regulator makes a decision on the first application, VanEcks, on May 23.

Grayscale has also filed to provide a mini trust a smaller fund seeded with assets from the larger trust.

Craig Salm, chief legal officer at Grayscale, has said the Grayscale Ethereum Mini Trust aims to complement the rest of the firms Ethereum-based line of products to support a range of investors.

The mini trust would launch as a lower-fee alternative spot Ethereum ETF and is designed for investors interested in optimising their Ethereum ETF investment for a buy-and-hold strategy in their brokerage or retirement account, for example, Salm said.

Analysts arent bullish on the chances of the SEC approving any of the applications for spot Ether products.

For one, Ethereums regulatory status isnt clearly defined. SEC chair Gary Gensler has been evasive about whether Ethereum is a security.

Plus, Gensler suffered political blowback from anti-crypto politicians in the Biden administration after the SEC approved spot Bitcoin ETFs though, arguably, the agency had no choice after it lost in court to Grayscale.

On Wednesday, Sonnenshein said while it was difficult to know what the SEC is thinking on Ethereum, Grayscale is optimistic that the SEC will do the right thing by investors.

He added that Grayscale Ethereum Trust is already an SEC reporting company. We file 10-Ks and 10-Qs [disclosures to the SEC], and weve always been a business that pushes our regulators to allow crypto to be brought further and further into the regulatory perimeter.

Reach out to the author at joanna@dlnews.com.

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Grayscale will focus energies on spot Ethereum products, CEO says - DLNews

Solanas validators are a bit like baristas flipping around an iPad theyre nicer to you when you include a tip. And as traders keep cramming into Solanas metaphorical coffee shop, the validator tip jar looks increasingly stuffed with money.

Validators are a group of 1,728 computers that run software to produce blocks on the Solana blockchain. Coinbase Cloud is a prominent Solana validator, as is Google Cloud. One revenue stream that validators earn is called maximal extractible value (MEV), which refers partly to tips paid by searchers to be included in Solana blocks.

This MEV revenue has been growing quickly since mid-March. Notably, Solana validators are earning more from MEV overall than Ethereum validators, according to Blockworks Research. Just a few months ago, Solanas MEV revenue was a rounding error compared to Ethereums.

Read more: MEV doesnt have to be a zero-sum game, research suggests

Broadly defined, MEV refers to the largest amount of value that validators can create by packing transactions into blockchain blocks. Blockworks Researchs dashboard suggests Solana validators raked in a hair under $7 million from MEV last week.

At the moment, Solana MEV is almost entirely the product of a protocol named Jito. Jito offers a fork of the Solana validator called Jito-Solana, and 78% of Solanas validators use this client, according to Jitos website. The client lets searchers, or traders, arrange transactions in bundles. Searchers can include a tip to try getting validators to send their particular bundle to the blockchain.

Whether all this is good for Solana is something of a matter of perspective. Some forms of MEV can be predatory. Jito recently suspended its mempool, a kind of waiting area for transactions, due to sandwich attacks that let opportunists create MEV by trading right before and after a transaction to manipulate the price and take profit from the trader.

Read more: Jito Labs ends mempool functionality citing impact on Solana users

In Jitos telling, the protocol is making Solana more efficient while also minimizing negative forms of MEV like sandwich attacking. If it can pull that off, Solana could see a lot of benefit.

Continued long-term growth in Solanas MEV would likely imply that less spam is being included in blocks, and Solana would have more available blockspace, Blockworks Research analyst Hayden Tsutsui said. In a best case scenario, more blockspace could free up room for more on-chain activity, which could also bring along more liquidity, Tsutsui said.

But it bears mentioning that as things currently stand, Solana is still staggering under a mountain of spam. More than 60% of non-vote transactions fail on Solana, according to Blockworks Research, largely due to bots taking advantage of Solanas cheap fees by inundating the network in hopes of getting transactions to land.

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MEV collected by validators is now higher on Solana than on Ethereum - Blockworks

Crypto asset manager Grayscale is unlikely to go to war again for Ethereum.

Grayscale famously sued the Securities and Exchange Commission in 2022 in a fight to offer customers Bitcoin ETFs. The case went in its favour, and paved the way for the products to launch.

But now?

Theyre probably just like, To hell with it. Let somebody else step up this time, Bloomberg Intelligence ETF analyst Eric Balchunas told DL News.

The firm this week withdrew a filing that wouldve made it harder for the SEC to defend the denial of Ethereum spot ETFs in court.

Theyre just sort of taking their ball and going home, Balchunas said.

And part of me doesnt blame them. Its not just money its bandwidth, its attention.

The SEC spent years shooting down Bitcoin spot ETF applications before Grayscale filed a lawsuit against the regulator in protest in 2022.

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The courts agreed something was wrong.

In September, a judge found that the SEC had acted in an arbitrary and capricious manner by denying the applications.

So Grayscale was able to convert its Bitcoin trust into a spot ETF finally giving the option for investors to exit the fund if they chose to. And 10 other firms, including BlackRock and Fidelity, launched their own ETFs.

But the move backfired on Grayscale. Its ETF has hemorrhaged over $17 billion in Bitcoin since January, while BlackRock and Fidelitys funds have vacuumed more than $23 billion in assets.

Balchunas said Grayscale probably didnt expect outflows to be so violent.

Seventy-eight days of straight outflows. They broke all records, he said. They didnt realise how hardcore the US ETF market is.

At issue was Grayscales 1.5% management fee, which turned out to be multiples higher than their competitors 0.2% or 0.3% fees.

They probably thought everybody would be between 0.7% and 1%, so they wouldnt be too far away at 1.5%, Balchunas said.

Grayscales Ethereum trust has almost $9 billion in assets which would likely bleed away if the vehicle were converted into a proper ETF.

These funds are trapped, as the current structure doesnt permit redemptions. Grayscale makes a solid 2.5% fee on those assets.

The other issue is that demand for an Ethereum ETF simply isnt as strong as for the Bitcoin ETF.

Balchunas predicted that, if they do launch, Ethereum ETFs will only get about 10% to 15% of the assets that Bitcoin ETFs garnered.

Grayscale has less to lose by not fighting for the Ethereum ETFs, Balchunas said. Bitcoin ETFs are the headlining act.

Ethereum ETFs will never have the same fever pitch attention around their approval.

Tom Carreras is a markets correspondent at DL News. Got a tip about Grayscale and Ethereum ETFs? Reach out at tcarreras@dlnews.com

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Grayscale fought hard for Bitcoin ETFs. Why it won't bother with Ethereum - DLNews

Coinbase is preparing for a future of 1 billion customers using decentralized applications on millions of blockchains safely and securely in a system integrating the Ethereum Virtual Machine (EVM) and Circles USD Coin (USDC).

Coinbase head of tokenization Anthony Bassili, speaking at TokenizeThis 2024 in Miami, said Coinbases Ethereum layer-2 Base blockchain will save time on Know Your Customer (KYC) and Anti-Money Laundering (AML) with identity attestation through the Ethereum Attestation service and Coinbase verification, which creates a tag on the users so-called smart wallet.

Coinbase verification is available after the customer has completed its KYC procedure. While that may not be sufficient in all cases, Bassili said:

Already, more than 300,000 wallets have been attested.

Related: Coinbases Base could make it the Nvidia of DeFi

To give those customers with wallets and verified identities Web3 access, Base will leverage the interoperability of EVM networks. The ecosystem will be supported by USDC. Coinbase took an equity stake in Circle in August. Right now, were somewhere above $28 billion of total assets in Circle, Bassili said. Coinbase also has the ability to mint USDC.

When robust tokenized assets in different asset classes arise, it could become possible to trade assets for assets without going through the intermediate step of trading them for dollars. Bassili said:

Crypto is the perfect embodiment of a liquid free open market structure where you can design any amount of complexity into it and have assets, trade with each other, dont have to be dollar pairs trade, Bassili said. In the meantime, USDC provides a first step to developing that market structure.

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Coinbase sees infinite interoperability potential with Ethereum and USDC - Cointelegraph

The United States Securities and Exchange Commission (SEC) has delayed its decision on Invesco Galaxys application for a spot Etherexchange-traded fund (ETF).

In a May 6 filing, the SEC gave itself another 60 days to decide on the Invesco Galaxy spot Ether (ETH) ETF, with the next deadline set to July 5.

The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein, the SEC wrote.

In recent months, the SEC has delayed decisions on applications from all eight prospective Ether ETF issuers, including BlackRock, Fidelity, Franklin Templeton, Hashdex and Ark 21Shares, in line with analyst expectations.

May 23 is the final deadline for VanEcks Ether ETF application and the only deadline that matters, said Bloomberg ETF analyst James Seyffart in a March 20 X post.

In March, senior Bloomberg ETF analyst Eric Balchunas downgraded his odds of the SEC approving the ETFs from 50% to 35%, as he was less convinced the regulator would approve VanEcks bid by the deadline.

Related: SEC will classify Ether as security, deny spot Ether ETFs Michael Saylor

Speaking to Cointelegraph on March 12, Balchunas looked to a prolonged period of radio silence from the SEC to prospective fund issuers, combined with increasing political pushback for SEC Chair Gary Gensler, as reasons for the decreasing likelihood of approval.

Seyffart said his cautiously optimistic attitude toward the pending Ether ETF applications had changed. As of March 20, he expects that all applications for an Ether ETF will ultimately be denied by the SEC on May 23.

Despite this consensus from ETF analysts, Ethereum advocate Anthony Sassano said he maintains conviction that the regulator could approve the funds by VanEcks final deadline.

Sassano looked to the agencys approval of Ether futures ETF products in 2023, citing a March 9 meeting between the regulator, crypto asset management firm Grayscale and crypto exchange Coinbase as further reasons why the SEC could still approve the applications.

Magazine: The real risks to Ethenas stablecoin model (are not the ones you think)

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SEC punts Invesco Galaxy spot Ethereum ETF decision to July - Cointelegraph