SEC Postpones Decision on Grayscale’s Ethereum ETF Application

The U.S. Securities and Exchange Commission (SEC) has postponed its decision regarding Grayscale’s application to transform its Ethereum Trust into a spot Ethereum ETF. The regulatory authority has set a new decision deadline for June 23, as it requires additional time to review the proposal and address concerns highlighted in the amended application.

In a detailed statement, the SEC expressed the necessity for an extended period to adequately assess the rule change proposal and its implications, as outlined in Amendment No. 1. This amendment is critical as it pertains to allowing U.S. national securities exchanges to list and trade this new type of ETF.

Grayscale initially filed a Form 19b-4 with NYSE Arca in October, seeking to convert its existing Ethereum Trust (ETHE) into a spot ETF. This filing follows the successful conversion of its Bitcoin Trust into a spot BTC ETF earlier in January. In response to the SEC’s delay, Grayscale escalated its efforts by registering a Form S-3 under the U.S. Securities Act, aimed at strengthening its position for the upcoming ETHE offering.

Further compounding the regulatory landscape, the SEC also delayed decisions on similar spot Ethereum ETF applications from prominent asset managers, including Franklin Templeton, BlackRock, Fidelity, and VanEck, with Franklin Templeton’s decision postponed to June 11. According to a recent report by crypto.news on April 23, these delays are indicative of the SEC’s cautious approach, particularly regarding features like staking which may raise securities concerns under the current administration led by SEC Chairman Gary Gensler.

Despite these regulatory hurdles, the market for spot Bitcoin ETFs has seen significant growth, with over $12 billion in net inflows, contrasting sharply with a $1.6 billion outflow from Grayscale’s Bitcoin Trust, which represents a 50% reduction in its previously managed volume.

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