Grayscale, a leading cryptocurrency asset manager, has made a surprising move by withdrawing its application for an Ether futures exchange-traded fund (ETF) just three weeks before the deadline for the securities regulator to decide on it.

The company filed a notice of withdrawal for the Grayscale Ethereum Futures Trust with the United States Securities and Exchange Commission (SEC) on May 7. This decision comes as the SEC was set to make a determination on Grayscale's Ether futures ETF by May 30.

Initially filed on September 19, 2023, Grayscale's 19b-4 application for an Ether futures ETF aimed to list on the New York Stock Exchange upon approval. The withdrawal of this application has raised questions, especially considering the impending deadline for the SEC to decide on at least one spot Ether ETF application by May 23, just over two weeks away.

Bloomberg ETF analyst James Seyffart previously speculated that Grayscale might strategically use its Ether futures ETF as a means to influence the SEC's decision on its spot Ether ETF. However, the sudden withdrawal of the application has left analysts puzzled about Grayscale's intentions and its implications for the broader ETF landscape.

Despite Grayscale's withdrawal, the odds of the SEC approving spot Ether ETFs by May 23 appear largely unaffected. Seyffart maintains that there is still a significant chance of approval, although it has decreased from earlier projections.

One notable consequence of Grayscale's withdrawal is the potential loss of legal recourse if its spot Ether ETF application is rejected by the SEC. However, SEC Chair Gary Gensler's recent comments suggest that the commission is still deliberating on the matter, indicating that the decision-making process is ongoing.

The SEC faces upcoming deadlines for applications from other major players in the cryptocurrency space, including VanEck, ARK 21Shares, and Hashdex. These deadlines range from May 23 to May 30, with additional applications from Grayscale, Invesco Galaxy, BlackRock, and Fidelity expected in the coming months. Many industry experts anticipate that the SEC will address all or most of these applications in a manner similar to its handling of spot Bitcoin ETFs earlier this year.