CRYPTOSTAKE
StakingMarketRegulationCryptostake ExplainsUncharted
SEC Delays Decision on Spot Ethereum ETF Applications from Investico and Galaxy Digital

Here we go again! SEC delays the ruling on spot Ethereum ETF for Galaxy Digital and Investico 

As expected, the Securities and Exchange Commission (SEC) has turned on the ‘delay for as long as possible’ mode for the unified spot Ethereum exchange-traded fund (ETF) application from two major asset management firms, Galaxy Digital and Investico, filed last September. It appears that the regulator is going to use the same playbook it did for Bitcoin ETF, postponing the decision to keep the market guessing. CryptoStake agrees with many cryptocurrency experts who think the SEC might delay decisions again in the next few months.

The SEC made its decision after the proposed rule change was published for public comment in the Federal Register on November 8, 2023. Then, on December 13, 2023, the agency extended the approval timeline, allowing more time for the decision-making process.It appears that the regulator decided to initiate proceedings for approval or disapproval for Ethereum ETF as well. The agency has asked commenters to focus on concerns regarding fraud prevention, market manipulation, and investor protections—matters that played a decisive role in the approval of spot Bitcoin ETFs in January. 

The agency didn't give specific deadlines. Instead, it said that the proposals should be sent within 21 days after being published in the Federal Register, and rebuttal comments should be sent within 35 days of the publication on the governmental forum. 

May is going to be crucial for the spot Ethereum ETF approval 

While this move from the SEC changes the schedule for Invesco and Galaxy's ETF proposal, it doesn't affect the overall approval schedule for spot Ethereum ETFs. As already said, delays will happen, but there is one big date, May 23rd, which is when the ETF proposal from VanEck reaches its final deadline.

 

Source:Bloomberg

The regulator is expected to review several similar proposals around the same time, possibly including those with deadlines after VanEck's proposal. In recent weeks, the SEC has delayed several other spot Ethereum ETFs, including applications from Fidelity on January 18, BlackRock on January 24, and Grayscale on January 25. However, these delays do not change the overall decision deadline set for May.

It's unclear if the SEC will approve a spot Ethereum ETF. Polymarket predicts a 43% chance of approval by May. Seyffart thinks it's 60% likely, while a JP Morgan member suggests it's 50%. SEC Chair Gary Gensler clarified that the agency's recent approval of several spot Bitcoin ETFs only applies to Bitcoin and shouldn't be interpreted otherwise.

What is the spot Ethereum ETF? 

A spot Ethereum ETF is an investment vehicle that allows people to acquire shares representing ownership in Ethereum (ETH) directly without actually buying and holding the cryptocurrency, thus avoiding being exposed to volatility and liquidity risks. The ETF tracks the price of Ethereum: if it goes up, the value of the ETF shares also goes up, and vice versa. Media pays so much attention to crypto ETFs because they represent a more familiar and, most importantly, regulated way for traditional investors to participate in the cryptocurrency market.