SEC Delays Decision on BlackRock’s Spot Ethereum ETF

The U.S. Securities and Exchange Commission (SEC) extended the review period for BlackRock’s application to launch a spot Ethereum ETF.

The regulator made a similar decision regarding a comparable proposal from Fidelity.

The Commission will continue to collect public comments.

Both investment giants submitted applications to register exchange-traded funds based on the spot price of the second-largest cryptocurrency by market capitalization in November 2023.

In January, the SEC approved similar Bitcoin products. BlackRock and Fidelity were among the 11 issuers of these ETFs.

Experts are divided on when the regulator will make a favorable decision on exchange-traded Ethereum instruments.

Some are betting on May, when the deadline for considering several applications, including those from VanEck and Grayscale, will arrive.

SEC just delayed @InvescoUS & @galaxyhq‘s #Ethereum ETF. 100% expected and more delays will continue to happen in coming months.

The only date that matters for spot #ethereum ETFs at this time is May 23rd. Which is @vaneck_us‘s final deadline date pic.twitter.com/gkVZL2QuPK

— James Seyffart (@JSeyff) February 6, 2024

Bloomberg analyst Eric Balchunas assessed the chances of approval at 70%. His colleague James Seyffart offered a more conservative forecast. The expert categorically dismissed optimists’ hopes for March, even betting against it with 4 ETH.

Analysts from JPMorgan and TD Cowen also expressed doubts about the imminent approval of an Ethereum ETF.

Morgan Creek CEO Mark Yusko suggested it might happen in May, but with less than a 50% chance. He cited the SEC’s ongoing hostility towards cryptocurrencies as the reason.

A similar view was expressed by prominent industry lawyer Jake Chervinsky.

I’m not saying for certain that the spot ETH ETF won’t be approved by May 23.

I’m just saying that the legal issues and policy environment in DC make denial (or an SEC request to withdraw) more likely than general sentiment suggests.

“Blackrock always wins” is a lazy bull take.

— Jake Chervinsky (@jchervinsky) March 3, 2024

“The legal issues and political environment in the capital make denial (or an SEC request to withdraw) more likely than general sentiment suggests. ‘BlackRock always wins’ is a simplistic view,” the expert wrote.

Travis Kling, founder of Ikigai Asset Management, partly agrees. The entrepreneur noted the absence of active communication between the Commission and potential issuers, unlike before the registration of Bitcoin ETFs. For this reason, he considers a postponement of the regulator’s decision to August most likely.

I don’t think there’s much of an expectation for a May approval. That’s not at all what’s priced in here. You haven’t seen the type of movements you’d expect between the filers and the SEC if it was going to be May.

Folks are more circled up around the Aug deadline. To the…

— Travis Kling (@Travis_Kling) March 3, 2024

In April, S&P Global Ratings identified risks for the Ethereum ecosystem in the potential emergence of spot ETFs.