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BlackRock’s Ethereum ETF Dreams Deferred as SEC Seeks More Time

Last Updated January 25, 2024 10:32 AM
Teuta Franjkovic
Last Updated January 25, 2024 10:32 AM

Key Takeaways

  • SEC delays decision on BlackRock’s spot Ethereum ETF until early 2024.
  • Other Ethereum ETF applications are also facing delays, but a key decision is expected by May.
  • Ethereum ETF approval could be a sign of growing crypto adoption.

The U.S. Securities and Exchange Commission (SEC) has extended  its decision-making timeline for BlackRock’s proposed spot Ethereum ETF, moving the date from January 25 to March 10, 2024.

This extension relates to a proposed rule change that would allow Nasdaq to list and trade shares of the BlackRock iShares Ethereum Trust.

‘Been There – Done That’ – SEC Delays Decision Until March 2024

Under the securities laws, the SEC had the option to approve, reject, or begin proceedings to determine the fate of BlackRock’s proposal by the initial January deadline. However, the agency has now opted to use its authority to extend the review period. The process began with Nasdaq’s initial filing  of the proposed rule change on November 21, 2023, followed by the proposal’s publication for public comment in the Federal Register on December 11, 2023.

Interestingly, the SEC pointed out that it has not received any public comments on the BlackRock Ethereum ETF proposal. This contrasts with the response to BlackRock’s spot Bitcoin ETF proposal, which garnered about 15 comments  within two months of its filing in June 2023. This delay in the decision highlights the ‘been there – done that’ situation that includes ongoing scrutiny and regulatory considerations surrounding cryptocurrency ETFs in the U.S. market.

SEC’s Decision on Ethereum ETFs Expected by May, Despite Delays

The SEC’s recent delay concerning BlackRock’s application is not anticipated to impact the overall timeline for Ethereum ETF decisions. Bloomberg ETF analyst James Seyffart remarked  that we can expect sporadic delays in spot Ethereum ETF decisions over the next few months, but the key date is May 23rd.

This date is crucial as it is the deadline for the SEC to approve or reject VanEck’s spot Ethereum ETF application. Around this time, the SEC is also likely to make decisions on other similar applications, including BlackRock’s.

The SEC has also postponed proceedings on Fidelity’s spot Ethereum ETF earlier this month. However, these delays will not affect the critical May deadline for a decision. Despite the requirement to reach a verdict by May 23, there is still uncertainty about the SEC’s stance on approving these funds.

FOX Business reporter Eleanor Terrett recently highlighted internal resistance within the SEC but noted optimism among some ETF issuers.

Current odds from Polymarket  indicate a 54% likelihood of approval by May 31. Meanwhile, Bloomberg’s Eric Balchunas forecasts a 70% chance  of approval, suggesting a positive outlook for Ethereum ETFs amidst the regulatory delays.

Skeptics are raising concerns about the likelihood of a swift approval for an Ethereum ETF by the SEC, citing the regulator’s history of delays in cryptocurrency-related matters. Ethereum’s distinctive characteristics, which do not align neatly with traditional investment categories, add complexity to the approval process.

This skepticism is shared by analysts at JPMorgan, who point out the uncertainty in how the SEC will categorize Ethereum – whether as a standard commodity or otherwise – in its upcoming May decision.

Ethereum ETF As a Sign of Growing Crypto Adoption

The concept behind the proposed investment vehicle is to offer investors exposure to Ethereum (ETH), the second-largest cryptocurrency by market capitalization. In a recent CNBC interview, BlackRock CEO Larry Fink expressed  his support for an Ethereum ETF. He stated that he sees “value in having an Ethereum ETF” and views the approval of such funds as “just stepping stones towards tokenization”.

BlackRock’s spot Bitcoin (BTC) ETF received approval on January 10 and commenced trading the following day. Among the 10 ETFs now trading, the iShares Bitcoin Trust, managed by BlackRock, has been particularly successful. It boasts $1.7 billion in assets under management, underscoring the growing interest and trust in cryptocurrency-based investment products.

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