SEC Postpones Decision on Grayscale’s Ethereum ETF
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The U.S. Securities and Exchange Commission (SEC) has opted to delay its decision on the approval of a proposed spot Ethereum exchange-traded fund (ETF) by Grayscale Investments, a prominent digital asset manager.
On Thursday, January 25, 2024, the SEC issued an order to initiate proceedings and gather additional public input on the proposal, initially filed in October 2023. The SEC’s order focused on crucial questions surrounding the potential risks and benefits associated with the fund, designed to mirror the price movements of Ethereum, the second-largest cryptocurrency globally.
Central to the SEC’s concerns is the potential vulnerability of the fund to fraud and manipulation. The regulatory body raised questions about the “concentration of control or influence by a few individuals or entities” within the Ethereum ecosystem. Furthermore, the SEC sought clarification on the availability and reliability of Ethereum futures contracts, which the fund plans to utilize for hedging in the spot market.
Interested stakeholders now have a 21-day window to submit comments on the proposal, with an additional 35-day period allocated for rebuttals. While the SEC did not specify a new decision deadline, it could extend up to 240 days from the initial filing, according to the regulatory guidelines.
Grayscale’s spot Ethereum ETF joins a list of similar proposals facing delays, including those from BlackRock and Fidelity. Despite the SEC’s approval of bitcoin futures ETFs in October 2023, no spot crypto ETFs have received the green light in the U.S.
Ethereum ETF Approval: Delayed but Not Denied
Crypto industry experts are divided on the SEC’s future stance. Some anticipate approval, potentially by May 2024, following the successful launch of spot Bitcoin ETFs.
However, skeptics, including Bloomberg Intelligence ETF analyst James Seyffart, foresee continued delays.
In a recent post on X, a social media platform, Seyffart noted, “Spot Ethereum ETF delays will continue to happen sporadically over the next few months. Next date that matters is May 23rd.”
Spot Ethereum ETF Delays will continue to happen sporadically over the next few months. Next date that matters is May 23rd https://t.co/2zBBvHkrVk
— James Seyffart (@JSeyff) January 24, 2024
The crypto community now awaits further developments as the SEC navigates the complexities of the evolving digital asset landscape.
