SEC Postpones Decision on Spot Ether ETF Applications

• SEC's Decision to Delay Applications by Grayscale and BlackRock
• SEC's Traditional Stance on Spot Crypto ETF Products
• Progress of Spot Ethereum ETF Applications
• Public Input on Recent Filings
• Concerns about Market Manipulation and Correlation

SEC's Decision to Delay Applications by Grayscale and BlackRock

The United States Securities and Exchange Commission (SEC) recently postponed a proposal from Grayscale Investments to transform its Ethereum$2,315 -2.42% trust product (ETHE) into an exchange-traded fund (ETF). Just a day prior, the SEC also delayed a similarly related application by BlackRock.

SEC's Traditional Stance on Spot Crypto ETF Products

Historically, the SEC has expressed reservations about spot crypto ETF products, with the exception of a few spot bitcoin ETFs that were permitted to launch in the U.S. in early January. This context makes the recent postponements of decisions on Grayscale's and BlackRock's applications unsurprising.

Progress of Spot Ethereum ETF Applications

Following the SEC's approval of spot bitcoin ETF applications, issuers and exchanges began filing revised documents addressing a range of queries posed by the regulator. However, it's uncertain if the spot ethereum ETF applications have reached similar stages of revision and clarification.

Public Input on Recent Filings

This week's filings raise a myriad of questions that require public input. One such question is whether a spot ethereum ETF might bear similarities to a spot bitcoin ETF. The filing reads: Do commenters agree that arguments to support the listing of Bitcoin$42,260 -0.64% ETPs apply equally to the Shares?

Another topic for public discussion pertains to specific features of ETH and its ecosystem, such as the proof of stake consensus mechanism and the concentrated control by a few individuals or entities. These factors invite concerns about ETH's vulnerability to fraud and manipulation.

Concerns about Market Manipulation and Correlation

Additional questions focus on the potential for market manipulation, the correlation between spot and futures markets, and whether the CME futures market is of significant size. These questions align with the ones the SEC previously asked when reviewing bitcoin applications.

Edited by Jonathan Stoker