The U.S. Securities and Exchange Commission (SEC) has postponed its decision on the spot Ether exchange-traded funds (ETFs) proposed by BlackRock, the world’s largest asset manager. The SEC said it needed more time to review the proposed rule change that would allow the iShares Ethereum Trust to trade on the Nasdaq.
The SEC announced the delay on January 25, one day before the initial deadline. This is the first of several possible delays that the SEC can use within a 240-day period. The final deadline for BlackRock’s spot Ether ETF is August 7, 2024. Bloomberg ETF analyst James Seyffart expects more delays for spot Ether ETFs in the coming months, but he stressed that May is the critical month for the SEC’s decision.
BlackRock filed for the iShares Ethereum Trust on December 11, 2023, becoming the first company to seek approval for a spot Ether ETF in the U.S. BlackRock is not the only company that has applied for a spot Ether ETF. Several other firms, including Grayscale Investments, WisdomTree, VanEck, and Valkyrie, have also submitted their applications to the SEC.
According to Bloomberg ETF analyst Eric Balchunas, the SEC is likely to make a final decision on all pending spot Ether ETFs in May, with a 70% probability of approval. He based his prediction on the fact that May 23 is the earliest final deadline for all the applicants and that the SEC approved the first spot of Bitcoin ETFs on January 10, which was also the earliest final deadline for the 10 applicants.
Spot Ether ETFs Could Boost Ethereum’s Adoption And Price
The approval of spot Ether ETFs would be a major milestone for the cryptocurrency industry and investors, as it would provide a more convenient and regulated way to access the second-largest cryptocurrency by market capitalization. Spot Ether ETFs could also boost the adoption and price of Ethereum, which is undergoing a major upgrade to become more scalable, secure, and sustainable.
However, the SEC’s postponement of BlackRock’s spot Ether ETF proposal indicates that the regulator is taking a careful approach to approving these products. The SEC’s decision will depend on its evaluation of the risks and benefits of spot Ether ETFs, as well as the suitability of the proposed rule changes.
In its notice, the SEC asked for public comments on several issues related to spot Ether ETFs, such as the similarities and differences between Ether and Bitcoin, the proof of stake consensus mechanism of Ethereum, the concentration of control or influence by a few individuals or entities, the susceptibility of Ether to fraud and manipulation, and the correlation between spot and futures markets.
The SEC has been historically reluctant to approve spot crypto ETFs, citing concerns about market manipulation, investor protection, and custody. It only allowed the first spot of Bitcoin ETFs to launch in the U.S. earlier in January after years of rejections and delays.
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