In a series of regulatory filings on December 18, the United States Securities and Exchange Commission (SEC) announced a postponement of its decision on two Ethereum exchange-traded funds (ETFs) – the Hashdex Nasdaq Ethereum ETF and the Grayscale Ethereum Futures ETF. The SEC’s move extends the timeline for a decision until May 2024, prompting speculation and analysis within the financial community.
The Hashdex Nasdaq Ether ETF, proposed by The Nasdaq Stock Market LLC, aims to list and trade shares under Nasdaq Rule 5711(i) (Trust Units). The ETF’s investment objective is to mirror the daily changes in the Nasdaq Ether Reference Price, designed to track Ethereum’s price performance. The Grayscale Ethereum Futures ETF, another subject of the SEC’s delay, seeks to offer exposure to Ethereum through futures contracts listed on the Chicago Mercantile Exchange (CME).
The SEC is now instituting proceedings under Section 19(b)(2)(B) of the Securities Exchange Act of 1934 to determine whether to approve or disapprove the proposed rule change. The Commission cites legal and policy concerns, emphasizing the need for national securities exchange rules to prevent fraudulent and manipulative acts and protect investors.
Bloomberg ETF analyst James Seyffart noted that these delays were anticipated and were projected to occur before December 25. He emphasized that the final decision deadline would now be extended to late May. Seyffart’s comments reflect an industry understanding that regulatory bodies often take additional time to scrutinize novel financial products, especially those involving digital assets like ETH.
Ethereum Community Voice: Stakeholder Input Sought
The SEC has invited public comments on various aspects of the proposed ETFs to gather valuable insights. Among the key questions raised are:
- Concerns about the susceptibility of the fund to manipulation.
- The correlation between Ether spot markets and CME Ether futures markets.
- The effectiveness of the proposed surveillance-sharing agreement with CME in detecting and deterring fraud.
However, the SEC’s decision to seek public input underscores the regulatory body’s commitment to a thorough and inclusive evaluation process. Market participants and enthusiasts will be closely watching for developments that could shape the future landscape of Ethereum-based financial products.
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