Waiting for the Securities and Exchange Commission’s (SEC) decision on spot Bitcoin ETFs, the cryptocurrency world is also gearing up for the likely approval of a spot Ethereum ETF. The SEC has just once again postponed its decision on approval of several spot Ethereum ETFs, including those from Ark & 21Shares, Grayscale and VanEck, which find themselves in limbo until May 23, 2024.
SEC postpones decision on several spot Ethereum ETFs
The Securities and Exchange Commission (SEC) postpones its decision on several spot Ethereum ETFs, including those proposed by Ark & 21 Shares, Grayscale and VanEck. The new deadline is now May 23, 2024.
Update: There it is. Delay order for @ARKInvest and @21Shares on their spot Ethereum ETF filing. Expected and was due by December 26th. Final date for these are in late May. https://t.co/Zs6Zsd4uKj pic.twitter.com/9u0nNiPD9O
– James Seyffart (@JSeyff) December 18, 2023
This postponement of the SEC’s decision is a standard procedure when reviewing ETF applications.
This deferral in no way prejudges the final decision; it allows ETF applicants to take the necessary time to adjust their proposal and meet the legal requirements imposed by the SEC, as is currently the case for Bitcoin ETFs for example
An Ethereum ETF is a financial instrument which, if approved by the SEC, would make it possible to invest in Ether indirectly, but also more simply.
Aimed at investors, corporates, banks and other financial institutions, it would offer them a convenient way to hold ETH, avoiding the administrative and technical complications of trading the 2nd most capitalized cryptocurrency on the market.
As this financial tool is designed to comply with legal and regulatory standards, it enables a more secure and regulated investment in the asset concerned. Before approving such a product, the SEC aims to ensure that it complies with anti-money laundering and anti-terrorist financing rules, among others.
The cryptocurrency ETF narrative
Alongside the spot Ethereum ETF, leading asset managers are engaged in a race for the first spot Bitcoin ETF.
Although the SEC’s final deadline for the spot Bitcoin ETF is mid-March 2024, a consensus of analysts believes it should be approved around January 10.
If confirmed, this would be very good news for the cryptocurrency market and applications for spot Ethereum ETFs would be more likely to be approved a few months later.
As mentioned above, ETFs allow the asset they represent to be held without the associated administrative and technical constraints. Entities such as BlackRock or Grayscale would hold the cryptocurrencies, guarantee the security of the funds and manage the complex administrative procedures, as in the last few months of negotiations with the SEC for ETF approval.
The main reason these ETFs are so much in the news is that they could mark the start of record capital inflows into the cryptocurrency market. Indeed, many investors would have fewer constraints to expose themselves to the crypto market, which could create strong buying demand and push Bitcoin and Ether prices higher.