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Did the SEC speak with Grayscale before the asset management giant withdrew its Ethereum futures ETF application? It's just one of the theories surrounding the news. Forextime.com/flickr

Cryptocurrency asset management titan Grayscale has withdrawn its application for futures Ethereum exchange-traded funds (ETFs). The digital assets world is abuzz, and there are even speculations the asset manager may have had a pep talk with the U.S. Securities and Exchange Commission (SEC) ahead of the decision.

Sherry R. Haywood, the SEC's assistant secretary for the trading and markets division, said in a Tuesday release that the Stamford-based asset manager has withdrawn its proposed Grayscale Ethereum Futures Trust ETF, but no reason was provided for the move. On the other hand, Haywood highlighted how the SEC designated a longer period to decide on Grayscale's application twice since it was filed in September.

The SEC was expected to make a final decision on Grayscale's application at the end of the month. The regulator is also expected to decide on the ETH ETF applications of other companies such as ARK 21Shares and VanEck later this month.

Crypto users on X (formerly Twitter) were quick to notice the move after prominent figures in the ETF circle posted about the move, including Bloomberg analyst James Seyffart, who said in a series of posts on the social media platform that he saw Grayscale as a "Trojan horse" among other applicants.

Seyffart said he was confused about the move, but guessed that the SEC may have had a hand in the decision. "Maybe the SEC spoke with Grayscale about this...And whatever was said convinced Grayscale to withdraw?" he said.

Other crypto enthusiasts had similar questions. "Why wouldn't Grayscale wait until after the SEC approves spot to withdraw? Why voluntarily do it prior?" one user asked. Another user asked whether the company was "informed [by] a SEC insider" that the funds won't be approved this year.

Some users joined the guessing game, with one suggesting that maybe Grayscale realized "ETH had their futures approved when it was proof of work," but now that Ethereum has transitioned to proof of stake, "it was a waste of time as it will be forever denied an ETF."

Proof of work refers to the process through which miners add new blocks to the blockchain ledger in competition, while proof of stake only requires an individual to buy and hold digital coins to confirm transactions on a blockchain network. There have been criticisms on proof of stake systems, as some believe such processes are easier to manipulate.

The latest development came about a week after reports emerged regarding applicants expecting the SEC to reject spot ETH ETFs sometime this month due to discouraging meetings in recent weeks.

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