The United States Securities and Exchange Commission (SEC) has decided to postpone its decision on several Ethereum (ETH) exchange-traded funds (ETFs) until May 2024. This move follows the agency’s decision to delay the consideration of the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF.
SEC’s Ethereum ETF Postponement
The Hashdex Ether ETF is designed to encompass both spot Ether and futures contracts in its portfolio. Meanwhile, the Grayscale Ethereum Futures ETF is being regarded as a strategic move, often described as a “trojan horse,” aimed at pressuring the SEC into approving Grayscale’s conversion of its Ethereum Trust to a spot Ethereum ETF.
Bloomberg ETF analyst James Seyffart expressed his views on the matter in a tweet on November 15, stating that if the SEC were to approve Grayscale’s ETH futures ETF application, it could pave the way for the approval of its spot Ether ETF application. Conversely, a denial could lead to Grayscale arguing that the SEC is treating Bitcoin and Ether futures ETFs differently under the Securities Act of 1933.
Watch [the SEC] try to either approve and argue why this is different from spot. Or Deny and argue why 1933 act products are meaningfully different from 1940 act products. Both are bad for SEC [in my opinion]. Genius move.
According to the filing, the SEC has initiated proceedings to gather additional public input on whether these ETFs should be listed, further contributing to the delay. Additionally, the decision on the VanEck spot Ethereum ETF and the spot Ethereum ETF proposed by Cathie Wood’s ARK Invest and 21Shares has also been postponed.
Bitcoin ETFs: January 2024 Anticipation
Despite these delays and uncertainties surrounding Ethereum ETFs, analysts are still optimistic about the approval of Bitcoin (BTC) spot ETFs by early 2024. Bloomberg ETF analysts James Seyffart and Eric Balchunas anticipate that the SEC will greenlight a spot Bitcoin ETF in January 2024.
This positive outlook persists despite last-minute amendments being hastily added by applicants to their proposals. Seyffart pointed out that BlackRock’s recent spot Bitcoin ETF update, accepting the SEC’s cash redemption system, signifies a trend among applicants adopting a cash-only model.
Notable entities like ARK, Bitwise, and Valkyrie have already embraced this approach, while others like Grayscale and WisdomTree continue to include in-kind or cash options in their filings.
In December, finance lawyer Scott Johnsson predicted a broader industry shift towards the adoption of a cash creation and redemption model for ETFs, emphasizing the changing landscape and regulatory preferences within the cryptocurrency market.
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