- The SEC has deferred its decision on whether it will approve or reject BlackRock and Fidelity’s Spot Ethereum ETF applications
- The SEC requests comments from the public on the Spot ETH ETFs
- A May 23 deadline is in view for the agency’s final decision on Spot Ether ETFs
- Prominent ETF analysts hint at an approval after a series of delays
The United States Securities and Exchange Commission on Monday, postponed its decision on the Spot Ethereum ETF applications filed by investment firms BlackRock and Fidelity. The Commission deferred its decision because it will be “instituting proceedings” to determine whether to approve or reject the Spot Ether ETFs.
The SEC Requires Public Comments On The Spot Ether ETFs
Consequent to The SEC’s delay of BlackRock and Fidelity’s Ethereum ETFs it has reached out to the public for comments on several relevant questions it raised about the ETFs. Asking for public comments is a vital process that the SEC has maintained to “prevent fraudulent and manipulative acts and practices” and to “protect investors and public interest.”
The regulator raised six important questions in its filings mostly surrounding the Ethereum ecosystem’s safety, the Ether market’s transparency and susceptibility to manipulation, surveillance sharing with Coinbase, and possible impacts of the Ether Futures ETFs on its spot market counterpart.
Especially striking, was the second question, which sought to compare the Spot Ethereum ETFs with its Bitcoin counterpart. Commenters were asked whether they “agree that arguments to support the listing of Spot Bitcoin ETPs apply to the Shares.” The second part of the question is one of the most relevant determinants of the Spot Ether ETF decision.
“Are there particular features related to ether and its ecosystem, including its proof of stake consensus mechanism and concentration of control or influence by a few individuals or entities, that raise unique concerns about ether’s susceptibility to fraud and manipulation?” asked the SEC.
There has been a longstanding debate on whether Ether is a security due to the dynamics of its proof-of-stake mechanism and its attendant implications. The SEC, in June 2023, sued Binance for selling unsecured securities. However, the SEC did not include Ether in the list of 12 crypto assets it alleged were securities. Also, the agency has yet to categorically say that Ether is a security.
The SEC requires all submissions to be sent in within 21 days from the publication date (March 4) and all rebuttal comments to be submitted within 35 days of the publication. All comments will be posted on the Commission’s official website pending its decision on the Spot Ether ETFs.
Spot Ether ETFs Will Surely Be Approved, Says Analysts
Some of the most notable ETF analysts have weighed in on the series of delays that the SEC has imposed on Spot Ethereum ETF applications. Nate Geraci, ETF Store President agrees that the SEC will approve the Spot ETH ETFs given that the SEC already allowed the Spot Ether ETFs.
“Really comes down to this:
Should approval of spot btc ETFs = approval of spot eth ETFs? Given SEC allowed eth futures ETFs, I say yes,” wrote Geraci on X.
The approval of the spot BTC ETFs and ETH Futures ETFs already seems like an advantage issuers can use to consolidate their case if the spot ETH ETFs end up not being approved for whatever reason. Blomberg’s Eric Balchunas also sees a 70 percent probability of an Ether Spot ETF approval in May.
As it stands, the odds stack in favour of an approval, which will make Ethereum the second cryptocurrency to be granted a spot ETF approval. The SEC set a May 23rd deadline for the final decision on VanEck’s spot Ether ETF application. The SEC’s decision on VanEck’s application will then determine the fate of the other applicants.