Why SEC Delays Put The May Ethereum ETF Deadline In Doubt

The fervor surrounding Ethereum ETH/USD exchange-traded funds (ETFs) continues to build, particularly after the successful launch of multiple Bitcoin BTC/USD ETFs earlier this year.

However, the path to approval for Ethereum ETFs faces continued regulatory scrutiny, with the U.S. Securities and Exchange Commission (SEC) engaging in a detailed review process with prospective issuers.

Grayscale Intensifies Efforts with Revised S3 Prospectus

Despite facing regulatory headwinds, Grayscale, a leader in digital currency asset management, has not relented in its push for a Spot Ethereum ETF.

The firm manages approximately $10.87 billion in its Ethereum Trust ETHE and has recently updated its registration through an S3 prospectus, aiming to elevate its ETHE to the NYSE Arca.

This filing is a critical move to transition the trust into a more accessible ETF format for investors.

“Today we submitted new regulatory filings that would further expand our product suite,” Grayscale remarked, reaffirming its commitment to providing investors with access to Ethereum in a regulated framework.

The decision from the SEC, however, has been deferred to June 11, 2024, as the commission requires more time to consider the complexities of such financial products.

Also Read: Bitcoin Spot ETFs Net $31.6M Inflows As Hong Kong Readies For ETF Launches

BlackRock Maintains Course Amid Regulatory Uncertainty

Similarly, BlackRock continues its pursuit of an Ethereum ETF, having amended its 19b-4 application. However, the outlook from analysts remains cautious.

“The likelihood that this would expedite an approval is slim to none,” stated James Seyffart, an ETF analyst from Bloomberg Intelligence, indicating only a 25% chance of a favorable decision by the previously anticipated May 23 deadline.

The hesitance from the SEC has led to broader concerns in the financial community about the likelihood of Ethereum ETF approvals in the near term.

Analysts from JP Morgan have estimated the chances of approval by the May deadline at no more than 50%.

In contrast, GSR’s analyst Brian Rudick has notably reduced the probability to 20% from an initially optimistic 75%.

Industry Reaction to Delays

The ongoing delays and rigorous scrutiny from the SEC have sparked significant commentary among industry specialists.

“It looks like a final nudge to try and get the SEC’s attention, although most likely in vain,” said ETF specialist Eric Balchunas, highlighting a general sense of pessimism that has persisted since the initial campaigns for cryptocurrency ETFs.

Benzinga's Future Of Digital Assets Event

As discussions and developments around Ethereum ETFs continue to unfold, they will undoubtedly be a topic of focus at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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