SEC has postponed the applications for Ethereum spot ETFs from Fidelity, BlackRock, and Grayscale this week. However, market analysts believe this was expected, and the key date is in mid-May.
Following the approval of a Bitcoin spot ETF in the United States, there is widespread optimism that an Ethereum spot ETF will also be approved this year. However, the U.S. Securities and Exchange Commission (SEC) stated that it is still carefully considering the relevant proposals. After delaying the applications from Fidelity and BlackRock, the SEC further postponed Grayscale’s application to convert its Ethereum Trust product (ETHE) into a spot ETF.
Questioning the susceptibility of the PoS mechanism to manipulation, the SEC issued an order yesterday, requiring the proposal to undergo a review process and solicit public opinion. In addition, the SEC specifically inquired about Ethereum’s proof-of-stake mechanism in the document and raised concerns about whether ETH’s control or influence concentration by a few individuals or entities could lead to increased 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’s PoS mechanism and centralization in the document.
The key date is May 23rd. Prior to Grayscale, the SEC also delayed decisions on Ethereum spot ETF proposals from BlackRock and Fidelity in the past week. Currently, analysts have both optimistic and pessimistic views on whether a spot Ethereum ETF will be approved.
Some believe that following the approval of a spot Bitcoin ETF earlier this month, the SEC may approve a spot Ethereum ETF as early as May. However, Bloomberg ETF analyst James Seyffart suggests that the SEC’s delays on a spot Ethereum ETF may occur irregularly in the next few months, with the next key date being May 23rd.
Whether ETH is considered a security is a key 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 that hinders the approval of an Ethereum ETF by the SEC.
It is worth mentioning that Gensler’s opaque stance on whether Ethereum is a potential security and its potential impact on the decision, along with the fact that the U.S. Commodity Futures Trading Commission (CFTC) is more inclined to view ETH as a commodity, and the Ripple’s partial victory in a court ruling last year, which determined that XRP is not a security in secondary market trading, will make “Gensler’s adoption of the position that most digital assets are securities a difficult battle.”
Related reports:
– When will the Ethereum spot ETF be approved? 52% of the respondents are optimistic about before the end of 2024; TD Cowen, JPMorgan: Not approving soon.
– Bloomberg analyst: Ethereum spot ETF expected to be listed “this year”! Probability of SEC approval in May reaches 70%.
– It’s Ethereum’s turn! Spot ETF expected to be approved for listing this year! Bloomberg analyst: SEC has implicitly recognized ETH as a commodity.
– Gotcha! SEC Chairman Gary Gensler’s “2018 statement” insisting that Ethereum is not a security.