SEC Delays Decision on Fidelity’s Spot Ethereum ETF

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Fidelity Investments’ application to launch a spot Ethereum ETF.

According to the statement, the regulator extended the discussion period by 45 days to allow “sufficient time to consider the proposed rule change and the issues raised.” The deadline is now set for March 6.

Fidelity #ethereum ETF delayed just now. Completely expected. Dates that really matter are late May in my view. https://t.co/8mvhcPRaS7

— James Seyffart (@JSeyff) January 18, 2024

“Fidelity’s Ethereum ETF was just delayed. Completely expected. In my view, the dates that really matter are late May,” commented Bloomberg exchange analyst James Seyffart.

The asset management firm filed for the Ethereum fund in November 2023. Fidelity became the seventh contender to launch an exchange product based on the spot price of ether.

Several experts, including Seyffart, believe that May 23 will be decisive, as it marks the final deadline for the SEC to approve or reject VanEck’s application. Some predict the Commission will make a decision on the entire package, as it did with spot Bitcoin ETFs on January 10.

New deadline to obsess over just dropped

May 23rd is the final deadline for decision on VanEck’s spot ETH ETF pic.twitter.com/dgi5EVbPeQ

— Will (@WClementeIII) January 10, 2024

Fidelity’s corresponding exchange product ranks among the top three in trading volumes, trailing only behind funds from Grayscale and BlackRock. These three spot Bitcoin ETFs control over 90% of the market.

Investment bank TD Cowen’s specialists suggested that the SEC might want to study the experience of products based on the first cryptocurrency before approving an Ethereum ETF. Therefore, they do not expect approval in the near future.

JPMorgan analyst Nikolaos Panigirtzoglou stated that the Commission first needs to classify ether as a commodity, rather than a security. He estimated the probability of this happening by May at no more than 50%.

For the same reason, Morgan Creek Capital co-founder and CEO Mark Yusko does not anticipate a swift approval of spot Ethereum ETFs.

However, Bloomberg exchange analyst Eric Balchunas is 70% confident in a positive SEC decision on the products in May.

Futures-based Ethereum ETFs have been trading on the U.S. stock market since October 2023. Their launch on the Chicago Mercantile Exchange occurred without much fanfare.

Trading of Bitcoin funds based on derivatives was approved by the SEC back in October 2021.

Meanwhile, market participants continue to expand the potential range of exchange products based on the first cryptocurrency. Following ProShares, Direxion has filed applications to launch five leveraged Bitcoin funds.

leveraged bitcoin ETFs may soon outnumber long only, pretty sure that’s never happened bf

— Eric Balchunas (@EricBalchunas) January 18, 2024

The firm offers instruments with leverage of 1.5x, 1.75x, and 2x.

“Leveraged Bitcoin ETFs may soon outnumber long-only ones, pretty sure that’s never happened before,” commented Balchunas.

Earlier, BlackRock CEO Larry Fink stated that he “sees value” in a spot Ethereum fund, calling it a step towards tokenization.