SEC postpones decision on Grayscale Ethereum ETF again

The U.S. Securities and Exchange Commission (SEC) has once again delayed approving the Grayscale Ethereum (ETH) Futures Trust exchange-traded fund (ETF). 

The postponement, disclosed in an SEC filing on March 22, extends the deadline from March 31 to May 30.

The decision has sparked significant interest and speculation within the cryptocurrency community, since it directly affects the status of Grayscale’s Ethereum Futures Trust ETF.

This delay comes against the backdrop of a broader regulatory landscape that is increasingly scrutinizing crypto-based financial products, following the recent approval of Bitcoin ETFs earlier this year.

So far, Grayscale’s Ethereum ETF application has been subject to multiple delays, with the SEC seeking additional time to evaluate the proposed rule change and address raised concerns. The decision whether to approve or disapprove the ETF was initially scheduled for December 2023, but the SEC postponed the decision, citing the need for additional public input.

In January, the SEC extended its decision-making process on Grayscale’s Ethereum ETF, as well as BlackRock’s application for an ether ETF. This action contributed to the increasing uncertainties regarding the approval timeline and sparked inquiries into the regulatory prospects for crypto-based financial products.

Long-term effect on Grayscale, crypto industry

Analysts suggest that the approval of Ethereum-based ETFs could potentially lead to a surge in Ethereum prices, positioning it as a strong competitor to Bitcoin (BTC) in the market.

As stakeholders closely monitor these developments, the decision on Grayscale’s Ethereum Futures Trust ETF remains a focal point in the crypto investment landscape, shaping the future trajectory of Ethereum and the broader cryptocurrency market.

Earlier this month, the SEC met with spot Ethereum ETF applicants to discuss bids for Ether-based investment vehicles.

This meeting came amidst a surge of interest in spot Ethereum ETFs following the successful launch of spot Bitcoin products.

The SEC has delayed decisions on spot Ether-based products, with VanEck’s filing taking the lead in this regulatory process. Other major issuers eagerly awaiting responses include BlackRock, Franklin Templeton Grayscale, and Invesco Galaxy.

The SEC’s postponement of decisions on these Ether-based products until at least May has created a sense of uncertainty within the industry.

VanEck’s filing holds a pivotal position, with the SEC facing a deadline of May 23 to either accept or reject their bid, setting the tone for subsequent decisions on similar applications from prominent asset managers.

The path to approving spot Ethereum ETFs faced challenges as the SEC grappled with regulatory complexities and concerns unique to Ethereum compared to Bitcoin.

Jake Chervinsky, Chief Legal Officer at Variant Fund, has expressed uncertainty regarding the approval of spot Ethereum ETFs by the SEC by the May deadline. Chervinsky’s doubts stem from legal issues and the policy environment in Washington, D.C., which he believes make denial or a request for withdrawal by the SEC more likely than approval.

SEC Chair Gary Gensler’s cautious approach to cryptocurrencies introduced an additional level of uncertainty into the approval process, highlighting the high-risk nature of crypto assets and the necessity for consensus among commissioners. 

Despite the growing interest and anticipation surrounding spot Ethereum ETFs, regulatory challenges and ongoing dialogues with issuers highlighted the complex dynamics influencing the future of Ether-based investment products in the market.