SEC Delays Decision on BlackRock’s Spot Ethereum ETF
The United States Securities and Exchange Commission (SEC) has postponed its decision on BlackRock’s proposed spot Ethereum (ETH) exchange-traded fund (ETF) a day ahead of the deadline. The SEC cited the need for more time to consider the implications of the proposed rule change. Sherry Haywood, the SEC’s assistant secretary, stated that the commission requires sufficient time to thoroughly evaluate the proposed rule change and the issues raised in it. The delay pushes the decision deadline from January 25 to March 10, 2024.
Other ETH ETF Applications Pending
BlackRock’s spot ETH ETF is not the only application awaiting a decision from the SEC. VanEck and Ark 21Shares also have pending ETH ETF applications with decision deadlines in May. Additionally, applications from Grayscale Investments, Invesco Galaxy, and Fidelity have final deadlines of June, July, and August, respectively. This has prompted speculation that the SEC will make a collective decision on all the pending spot Ether ETFs in May, similar to how it handled ten pending spot BTC ETFs earlier this year.
Outcome of ETH ETF Decision Uncertain
While the delay in the decision on BlackRock’s spot ETH ETF may be seen as a positive sign by proponents of ETF approval, it does not guarantee a favorable outcome. SEC Commissioner Hester Peirce’s comments on the BTC ETF approval are viewed optimistically by some, but it is uncertain whether the same approach will be applied to Ethereum. SEC Chair Gary Gensler’s position on Ethereum as a commodity or security and his concerns about the shift to a proof-of-stake consensus mechanism raise doubts about the eventual approval of an ETH ETF.
Gensler’s View on Ethereum’s Status and Howey Test
Gensler has highlighted the differences between Bitcoin and Ethereum, particularly regarding Ethereum’s shift from proof-of-work to proof-of-stake. He believes that this change, coupled with investors’ expectation of returns, meets the criteria of the Howey test, which determines whether securities exist. While Gensler has been reluctant to classify Ethereum definitively as a security, his statements suggest that he may not feel compelled to approve an ETH ETF in the same way he did with BTC.
Uncertainty Surrounds Approval of Spot Ethereum ETF
Given the ambiguity surrounding the SEC’s decision on a spot Ethereum ETF, it is essential for investors to consider various factors before assuming imminent approval. Both the outcome of BlackRock’s application and the SEC’s overall stance on digital assets as securities may not align. With Gensler’s reservations about Ethereum’s status and the shift to proof-of-stake, the approval of a spot ETH ETF is far from guaranteed. As the SEC continues to evaluate these applications, investors should approach this potential new product with caution and closely monitor the regulatory landscape.
Analyst comment
Negative news for the market. The SEC’s delay on BlackRock’s spot Ethereum ETF suggests cautious scrutiny and potential challenges. Uncertainty surrounds the eventual approval due to SEC Chair Gensler’s concerns about Ethereum’s status as a commodity or security and the shift to proof-of-stake. Approvals for other ETH ETF applications in May may provide a clearer picture. Investors should approach this potential new product with caution and monitor the regulatory landscape closely.
