Ether Spot ETF Delayed Again by SEC: More Time Needed
The U.S. Securities and Exchange Commission (SEC) recently announced a decision to postpone the review of Ethereum spot ETF applications filed by Grayscale Investments and Wall Street giant Franklin Templeton, indicating the SEC’s cautious stance towards cryptocurrency-related products.
Grayscale had submitted an application to convert its Ethereum Trust into an ETF, with the original deadline set for April 24. However, in a notice released on April 23, the SEC extended the decision deadline to June 23. The decision deadline for Franklin Templeton’s application was also pushed to June 11 for reevaluation.
The SEC stated that more time is required to thoroughly review the Ethereum spot ETF proposals put forth by these financial institutions.
In addition, on April 19, BlackRock revised its application for an Ethereum spot ETF, including the creation and redemption process of the ETF. The SEC has also solicited feedback on the revised proposal rule changes from various parties. 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! How do experts view the uncertain SEC stance?
The SEC has maintained a conservative and cautious approach to cryptocurrency investment products. Despite approving several Bitcoin spot ETFs in January this year, allowing them to finally be listed and traded after a decade of application and review, the SEC seems to remain reserved regarding Ethereum spot ETFs.
Final Decision Deadline for Ethereum ETF Approaches in May! What do industry experts think?
As the final decision date for the Ethereum spot ETF approaches, experts and market analysts generally hold a skeptical view on the SEC approving Ethereum spot ETFs in the near future.
For instance, Bloomberg ETF analyst James Seyffart stated in a March article that the probability of approving the Ethereum ETF application by May 23 had dropped to 35%, with a high possibility of rejection. Seyffart further 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 the more likely date in 2025.
Bloomberg ETF analyst Eric Balchunas estimated that the probability of an 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, stating, “We are the first to apply for an Ethereum line or ETF in the United States, and we and Ark Invest CEO Cathie Wood are probably the first ones to be rejected in May.”
Furthermore, Standard Chartered Bank, which was previously optimistic about the Ethereum spot ETF application, recently changed its stance and stated that it would be challenging to obtain approval in May, although the Ethereum spot ETF would inevitably be approved in the long run.
Geoffrey Kendrick, Head of FX 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 “similar approval process for Ethereum as Bitcoin ETFs” and constructive dialogue between the SEC and ETF applicants. However, as of now, no such dialogue has been observed, leading the team to believe that the chances of approval in May are 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 Ethereum spot ETFs in the near future?
However, these pessimistic predictions are not surprising. Even though Bitcoin spot ETFs were approved earlier this year, the SEC has continuously delayed other Ethereum spot ETF applications.
SEC Chairman Gary Gensler has repeatedly stated that cryptocurrencies other than Bitcoin “are securities.” Bitcoin spot ETFs were approved because Bitcoin meets the SEC’s “gold standard.”
Limited supply, non-renewable, and specific cost required for acquisition.
Stable network and no significant changes expected in consensus mechanism upgrades.
No ICO (Initial Coin Offering) or any form of fundraising.
Large and distributed number of holders, relatively low price manipulation risk.
However, Ethereum does not fully meet these criteria. For example, the Ethereum network has been continuously updated and even underwent a major change from Proof-of-Work (PoW) to Proof-of-Stake (PoS) consensus mechanism. The PoS mechanism allows investors to earn rewards by staking tokens and grants them voting rights. This sounds similar to holding shares in a company and being able to influence its operational direction based on the number of shares held.
Moreover, in 2014, Ethereum launched its first ICO, raising $18 million in funding, and early participants received 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 an asset with securities attributes.
Additionally, there were reports in March that the Ethereum Foundation and three anonymous companies received subpoenas for cooperation in an SEC investigation. According to the reports, the SEC aims to classify Ether as a security, and the three companies that received subpoenas were asked 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 there is increasing discussion and market interest in cryptocurrency and related investment products, the SEC is clearly seeking a balance between protecting investors and promoting financial innovation.
May 23 will be the final deadline for the first Ethereum spot ETF approval, and the market will have a clearer view of the development direction of the SEC regulatory framework and the market prospects of cryptocurrency products based on the final outcome announced at that time.
Further reading:
SEC Delays Ethereum Spot ETF Application for the Second Time! May is a Key Time, Will it be Approved?
References:
cointelegraph, cointelegraph, Decrypt