Key Points
The crypto investor community is eagerly awaiting a decision on the approval of an Ethereum spot ETF, following the approval and launch of Bitcoin spot ETFs in the US earlier this year. The anticipated date for this decision is May 23rd.
Recently, the US Securities and Exchange Commission (SEC) postponed its decision on BlackRock’s Ethereum ETF proposal. The SEC is now inviting public feedback on the investment products based on Ethereum, the second-largest cryptocurrency.
The Journey of BlackRock’s Ethereum Spot ETF Proposal
BlackRock submitted its proposal for an Ethereum spot ETF in November 2023. The iShares Ethereum Trust proposed by the firm aims to closely track Ether’s price performance.
Notably, Fidelity, another prominent player in the asset management industry, submitted a similar proposal in the same month. Other firms such as Franklin Templeton, Grayscale, and Ark Invest have also proposed Ethereum-based exchange-traded products and are awaiting SEC’s approval.
In January, the SEC decided to extend the decision timeline on BlackRock’s proposal to March. The commission justified this by stating that a longer examination period was necessary to consider the proposed rule change to list and trade shares of the iShares Ethereum Trust.
As March arrived, the SEC has once again delayed its decision. The SEC’s recent filing indicates that it is still determining whether the proposed rule change should be approved or disapproved.
According to the document, the institution of proceedings does not suggest that a decision has been made. The SEC deems this step necessary due to the legal and policy issues raised by the proposed rule change.
The SEC Seeks Public Feedback
The SEC has decided to seek public feedback, inviting comments on the proposal’s sufficiency and any other aspects of the proposed rule change.
The document lists six main concerns for which interested commenters might submit their views and supporting data. These concerns include whether the arguments presented by the exchange to support Bitcoin ETPs apply equally to Ether and whether Ether is susceptible to fraud or market manipulation due to Ethereum’s specific features.
The window for comment submission extends from the day of publication in the Federal Register to 21 days after publication. Rebuttals to other people’s public submissions must be submitted within 35 days of the publication date in the Federal Register.
ETF experts like James Seyffart and Eric Balchunas have expressed optimism about the approval of Ethereum ETFs in May this year. Seyffart stated after the January delays that a subsequent postponement in March was most likely.
Jake Chervinsky, Lawyer and CLO of Variant, recently shared his view. Chervinsky doesn’t rule out the possibility of approval by May 23.
However, he believes that the legal issues and the policy environment in DC make denial or withdrawal request more likely. Chervinsky considers that, in the case of a withdrawal request and a potential refusal from the asset management firm, the SEC would then write a denial order explaining its reasons.
