The SEC has delayed the applications for Ethereum spot ETFs from Fidelity, BlackRock, and Grayscale this week, which was expected by market analysts. The key date is in mid-May.
Following the approval of Bitcoin spot ETFs in the United States, there has been widespread optimism that Ethereum spot ETFs will also be approved this year. However, the U.S. Securities and Exchange Commission (SEC) stated that it is still carefully considering the proposals. After postponing the applications from Fidelity and BlackRock, the SEC has now delayed Grayscale’s application to convert its Ethereum Trust product (ETHE) into a spot ETF.
Questioning the vulnerability of the PoS mechanism to manipulation, the SEC issued an order yesterday requesting the initiation of proceedings and solicitation of public comments on the proposal. In addition, the SEC specifically inquired about Ethereum’s proof-of-stake mechanism and whether ETH’s “control or influence concentration” by a few individuals or entities could lead to a risk of fraud and manipulation for the fund. According to the SEC, the public comment period is 21 days, with a rebuttal period of 35 days.
The SEC raises concerns about ETH PoS mechanism and centralization in spot ETF proposal. The key date is May 23.
In fact, prior to Grayscale, the SEC has also postponed decisions on Ethereum spot ETFs from BlackRock and Fidelity within the past week. Analysts currently hold both optimistic and pessimistic views on whether the Ethereum spot ETF will be approved soon, following the approval of the spot Bitcoin ETF earlier this month.
However, Bloomberg ETF analyst James Seyffart suggests that the SEC’s delays on the Ethereum spot ETF could occur irregularly in the coming months, with the next key date being May 23.
Whether ETH is considered a security is a crucial factor for the approval of a spot ETF. Among all cryptocurrencies, only Bitcoin is currently regarded by the SEC as a commodity with value storage capability, while Ethereum still has the potential to be classified as a security. This is another major obstacle for the approval of an Ethereum spot ETF by the SEC.
It is worth mentioning that Gary Gensler’s opaque stance on whether Ethereum is a potential security may play a role in the decision. In fact, the U.S. Commodity Futures Trading Commission (CFTC) is more inclined to view ETH as a commodity. Coupled with the partial victory Ripple obtained in court last year, with a ruling that XRP is not a security in secondary market trading, this will make “Gensler adopting the position that most digital assets are securities” a challenging battle.
Related Reports:
– When will Ethereum spot ETFs be approved? 52% of the survey respondents are optimistic about before the end of 2024; TD Cowen, JPMorgan: It won’t be approved soon.
– Bloomberg analyst: Ethereum spot ETF expected to be listed “this year”! Probability of SEC approval in May reaches 70%.
– Ethereum’s turn! Spot ETF expected to be approved for listing this year! Bloomberg analyst: SEC has implicitly recognized ETH as a commodity.
– Caught! SEC Chairman Gary Gensler’s “2018 assertion” that Ethereum is not a security.