SEC delays decision for BlackRock’s proposed spot Ethereum ETF

SEC delays Blackrock ETH ETF

In November 2023, Blackrock applied to convert its Ethereum Trust into an ETF called iShare Ethereum Trust. On Wednesday, January 24, the SEC delayed its decision on Blackrock’s proposed spot Ethereum ETF, saying it wants more time to consider the proposal. According to last week’s filing:

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

This delay marks the first of several delays the regulator can impose before announcing a final decision on the spot-ETH EFT, which must come within 240 days of the SEC opening comments on the applications. The next deadline is March 10, when the SEC may approve, disapprove, or delay proceedings further.

The move came after the SEC also delayed Fidelity’s application for the Fidelity Ethereum Fund last week, and the Grayscale’s application highlighted the cautious approach the SEC is taking.

Dates to watch for ETH-ETF approval

There is a good chance that the SEC will continue to delay the ETH-ETF approval, with the final decision possibly coming on May 23. This is the earliest final deadline when the SEC could approve all ETH-ETF applications at once in a similar way that it did with the BTC-ETF approving all applications once. However, the SEC has until August 7 to reach a final verdict on Blackrock’s application.

Spot Ethereum ETFs have been getting increasing attention following the spot-Bitcoin ETF approval, where Blackrock and Fidelity are the top-performing ETFs. Following the approval earlier this month, ETH/USD outperformed BTC/USD, rising over 10% on January 10, on optimism that it could be next in line. Although it has since pared those gains.

If approved, the Ethereum ETF would give an institutional and retail investor exposure to the world’s second-largest cryptocurrency market by market capitalization. The approval could also signal improved regulatory standards in the US.

Not a done deal

However, this is by no means a done deal, and there are still some doubts over the approval of a spot-ETH ETF after the SEC Chair Gary Genseler played down the likelihood of the approval. He was clear that the approval of Bitcoin’s ETF was not an endorsement of crypto assets.

“As I said two weeks ago, that which we did with regard to bitcoin exchange-traded products is cabined to this one commodity non-security and shouldn’t be read to be anything other than that.”

The SEC can sometimes behave in an unpredictable way, which can make forecasting a decision outcome challenging. However, the decision could still be helped by the BTC-ETF precedent.

Sources