SEC Delays Ethereum Spot ETF Again, Requires More Time
The U.S. Securities and Exchange Commission (SEC) recently announced that it will delay the review decision on the Ethereum spot ETF applications filed by Grayscale Investments and Wall Street giant Franklin Templeton. This demonstrates the SEC’s cautious stance towards cryptocurrency-related products.
Grayscale had filed an application to convert its Ethereum Trust into an ETF, originally set to expire on April 24. However, in a notice issued on April 23, the SEC extended the decision deadline to June 23. The decision deadline for Franklin Templeton’s application was also extended for reevaluation by June 11.
The SEC stated that more time is needed to thoroughly review the Ethereum spot ETF proposals put forward by these financial institutions.
In addition, on April 19, BlackRock revised its application for the Ethereum spot ETF, including the creation and redemption process of the ETF. The SEC has also publicly solicited feedback on the revised proposal rule changes. The feedback will be published on the official website and will be open for 21 days.
Further reading:
BlackRock’s Ethereum ETF Application Delayed to March! Uncertainty from SEC, How Do Supporters and Opponents View It?
The SEC has maintained a conservative attitude and cautious review process towards cryptocurrency investment products. Although multiple Bitcoin spot ETFs were approved by the SEC in January this year, allowing them to be listed and traded after a decade-long application and review process, the SEC still seems to be reserved when it comes to Ethereum spot ETFs.
The final decision deadline for the Ethereum spot ETF is approaching in May! What do industry experts think?
As the final decision date for the Ethereum spot ETF approaches, experts and market analysts generally have a skeptical attitude towards the SEC approving the Ethereum spot ETF in the near future.
For example, James Seyffart, an ETF analyst at Bloomberg, previously stated in March that the probability of the Ethereum ETF application being approved on May 23 has dropped to 35%, and there is a high possibility of rejection in this round of applications.
James Seyffart also pointed out that it is unlikely for the SEC to reject institutional applications in May and then approve similar products a few months later. Therefore, he believes that even by the end of this year, it is difficult to pass, and the team is currently studying dates in 2025 that are more likely to happen.
Eric Balchunas, an ETF analyst at Bloomberg, estimated that the probability of the Ethereum spot ETF being approved in May is only 25%.
Jan van Eck, CEO of VanEck, stated in an interview with foreign media that he believes the SEC is likely to reject the Ethereum ETF application. “We are the first to apply for an Ethereum line or ETF in the United States, and we and Ark Invest CEO Cathy Wood may be the first to be rejected in May.”
In addition, Standard Chartered Bank, which was originally optimistic about the Ethereum spot ETF application, has recently changed its stance and stated that it is difficult to obtain approval in May, although the Ethereum spot ETF will inevitably be approved in the long term.
Geoffrey Kendrick, Head of Foreign Exchange and Digital Assets Research at Standard Chartered Bank, stated that the team previously expected the SEC to approve the Ethereum ETF on May 23 based on the similarity of the Ethereum approval process to Bitcoin ETFs. They also expected constructive dialogue between the SEC and ETF applicants.
However, so far, no such dialogue has been seen, so the team believes that the chances of obtaining SEC approval in May are very low.
Further reading:
Ethereum Faces “Nation-Level” Investigation! Slim Chance of Spot ETF Approval, What’s the Problem?
Why are experts pessimistic about the approval of the Ethereum spot ETF in the near future?
However, it is not surprising that these pessimistic predictions have emerged.
Even though the Bitcoin spot ETF was approved earlier this year, the SEC has consistently delayed other Ethereum spot ETF applications.
SEC Chairman Gary Gensler has repeatedly stated that cryptocurrencies other than Bitcoin “are securities.”
The reason why the Bitcoin spot ETF was able to be approved is that it met the SEC’s “gold standard.”
Limited supply, non-renewable, and specific costs required for acquisition
Stable and mature network, consensus mechanism upgrades are not expected to cause significant changes in the foreseeable future
No ICO (Initial Coin Offering) or any form of fundraising
Large and decentralized number of coin holders, relatively lower price manipulation risk
However, Ethereum does not fully meet the above criteria.
For example, the Ethereum network has been constantly updated and upgraded, even undergoing a major change from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism. Proof-of-Stake allows investors to earn income by staking tokens and has certain voting rights. This sounds similar to shareholders holding shares in a company and being able to influence the company’s operations based on the number of shares owned.
In addition, in 2014, Ethereum conducted its first ICO and successfully raised $18 million. At that time, early participants could receive a certain amount of Ether (ETH). Since the SEC considers ICO tokens as securities, such fundraising activities make Ethereum more likely to be classified as “assets with securities characteristics.”
Furthermore, there were reports in March that the Ethereum Foundation and three anonymous companies received subpoenas from the SEC for cooperation in an investigation. According to reports, the SEC aims to classify Ether as a security, and the three companies that received subpoenas were required to provide documents and financial records related to their dealings with the Ethereum Foundation.
These decisions by the SEC reflect its attitude and cautious considerations towards the cryptocurrency market. Although the discussion on cryptocurrencies and related investment products is increasing, and there is growing interest in the market for these products, the SEC is clearly seeking the appropriate balance between protecting investors and promoting financial innovation.
May 23 will be the final deadline for the first Ethereum spot ETF approval, and based on the final results announced at that time, the market will have a clearer view of the development direction of the SEC’s regulatory framework and the market prospects of cryptocurrency products.
Further reading:
SEC Delays Ethereum Spot ETF Application for the Second Time! May is a Crucial Time, What Do Experts Predict?
References:
Cointelegraph,
Cointelegraph,
Decrypt
