SEC Delays Approval of Spot Ethereum ETF Applications

NOIDA ( — The US Securities and Exchange Commission (SEC) has delayed the approval of spot Ethereum ETF applications. Yet, the market response to the news remained surprisingly mild, with little to no FUD.

Delaying Spot Ethereum ETF Approval To Get Public Feedback: SEC

The regulator stated it needed additional public input before deciding, particularly concerning integrating Coinbase’s surveillance system with the proposed ETFs. As such, the decision might be a result of the SEC remaining cautious of the crypto sector.

SEC delays spot Ethereum ETF
The SEC decision was not unexpected, says Bloomberg analyst.

The regulatory watchdog is currently reviewing several applications for spot Ethereum ETFs, including those submitted by Invesco and Galaxy Digital. Per the SEC release, it had pushed the decision for Invesco and Galaxy Digital decisions by 35 days to have enough time to go through the public feedback.

In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, and the rules and regulations thereunder

The SEC said

The SEC’s decision to extend the review period might also be a Gary Gensler tactic to find some reason to deny approval to another spot crypto ETF.

Meanwhile, ARK Invest and 21Shares have modified their ETF proposals to opt for a cash-only creation and redemption, per a regulatory filing. Moreover, ARK Invest’s modified application also includes plans for potential staking of the ETF’s Ether holdings to generate additional income through staking rewards.

The firm adopted a similar cash creation and redemption model for its approved Bitcoin ETF. Safe to say, the Cathie Wood-led firm hopes for similar results this time.

Analyst Perspectives and Market Sentiment

Financial analysts have been closely monitoring the situation, with opinions on the impact of the SEC’s delays varying. Bloomberg’s James Seyffart highlighted May 23, the deadline for VanEck’s spot Ethereum ETF proposal, as a pivotal moment that could clarify the SEC’s position.

Prediction markets suggest a mixed outlook on approval chances, reflecting the inherent unpredictability of regulatory decisions. The Fear and Greed Index for Ethereum plummeted after news of the delay hit the wires, going from 66% (greed) to a more neutral 43%.

SEC delays spot Ethereum ETF
Analysts remain optimistic of a spot Ethereum ETF approval.

However, Seyffart and other analysts remain positive about the SEC approving the spot Ether ETF applications. Bloomberg’s analyst emphasized that the SEC’s announcement was “100% expected,” adding that “more delays will continue to happen in coming months.”

Another analyst, going by the username ‘Seth‘ on X, stated that the SEC approving a spot Etheruem ETF was almost a certainty. Seth highlighted that Blackrock has also applied for a spot Ether ETF, noting that the firm has a “99.9% approval rating.

The SEC’s final decisions will undoubtedly be key indicators of the regulatory framework’s evolution and readiness to embrace digital assets. For now, the SEC’s postponement introduces a period of uncertainty in the crypto markets.

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