The Securities and Exchange Commission (SEC) of the United States has recently announced a delay in its decision-making process regarding the application for a spot Ethereum exchange-traded fund (ETF) filed by asset manager VanEck. This postponement was communicated through a notice issued on March 20, where the SEC extended the timeframe for evaluating the request from the Cboe BZX Exchange to list and trade shares of the VanEck Ethereum ETF.
Under the new schedule, the SEC is expected to reach a final verdict on the investment vehicle by May 23. The rationale behind this extension is the necessity for additional time to conduct a comprehensive review of the proposed rule change. The decision to delay aims to ensure that the commission can meticulously examine all facets of the ETF application.
This development follows the SEC’s similar extensions for reviewing applications for spot Ether ETFs from other entities like Hashdex and ARK 21Shares. James Seyffart, an ETF analyst at Bloomberg, has conjectured that the current wave of Ether ETF applications, with deadlines set in May 2024, may potentially meet disapproval.
In the midst of these deliberations, reports have emerged suggesting that the SEC is investigating various firms for potential connections to the Ethereum Foundation. This investigation is part of the commission’s broader initiative to ascertain the regulatory classification of Ether, particularly whether it should be deemed a security. The outcome of this inquiry remains uncertain and could impact the approval of ETH ETFs.
The Regulatory uncertainty and public response
It’s worth noting that the SEC has previously demonstrated a readiness to greenlight investment instruments tied to Ether futures, indicating a certain level of recognition of the cryptocurrency as a commodity. However, the delay in VanEck’s ETF application has now opened the proposal to public commentary, introducing an additional layer of scrutiny and feedback into the process.
The SEC’s stance on Ether ETFs follows its January approval of permitting U.S. exchanges to list and trade shares of spot Bitcoin ETFs, a decision supported by the majority of commissioners. Nonetheless, two U.S. Senators, Jack Reed and Laphonza Butler, have urged SEC Chair Gary Gensler to decline Ether ETF applications, citing potential risks to retail investors.
The SEC’s decision to postpone the approval or disapproval of VanEck’s spot Ethereum ETF application underscores the commission’s meticulous review process and its ongoing endeavor to navigate the regulatory terrain surrounding cryptocurrencies such as Ether. The ramifications of this decision and the broader regulatory outlook on Ether ETFs are likely to be closely observed by market participants and investors alike.
