SEC Asks Nasdaq and Cboe to Update Ethereum ETF Proposal

Reuters reports that the US Securities and Exchange Commission (SEC) has asked Nasdaq and Cboe to update their positions on Ethereum exchange-traded fund (ETF) proposals.

This request marks an important step in the regulatory review process for these financial products.

SEC's “Fine-Tuning” Inquiry into Ethereum ETF Application

According to Reuters, sources familiar with the matter said the SEC asked Nasdaq and Cboe to “fine-tune” their ETF filings. This request is considered a critical condition for approval. The SEC's listing of these proposals underscores its commitment to ensuring regulatory standards for new financial instruments.

Nine firms have applied to list Ethereum ETFs, including industry heavyweights such as Grayscale, Vaneck, 21Shares, Ark Invest, Hashdex, Invesco, Galaxy, Fidelity, BlackRock, Franklin Templeton and Bitwise. Each company is awaiting the SEC's decision.

Market speculation has worsened following the Reuters news. Bloomberg ETF analysts, including James Seifert, revised the probability of approval from 25% to 75%. Standard Chartered, a financial institution with more than $800 billion in assets under management, predicted an 80-90 percent chance.

Seyffart also noted that Grayscale recently filed an updated 19b-4 for their Ethereum Mini Trust, indicating increased activity around ETF ideas. This file explains that it is the first 19b-4 for the Grayscale Mini Ethereum Trust.

“I don't think this will be included in the first wave of approvals,” Seifert commented.

Systematic adjustment of loyalty

As the big day approaches, Fidelity Investments has significantly adjusted its position on the Ethereum ETF proposal. The most recent S-1 filing with the SEC indicates that the accrual feature has been eliminated. This step represents a strategic shift in response to regulatory uncertainties.

Alex Thorne, head of research at Galaxy Digital, speculated on the SEC's potential approach. He suggested that the SEC could differentiate between Ethereum and staked Ethereum in their regulatory frameworks.

Read more: Ethereum ETF explained: what it is and how it works

“If the speculation from the SEC about the 180 on Ethereum ETFs is true, I suspect they will try to inject a needle between ETH not being a security and ETH being a security. That would allow the SEC to approve Ethereum ETFs while maintaining the previously stated comments,” Thorne said.

The detailed review process by the SEC, combined with strategic adjustments by companies like Fidelity, indicates a thorough and careful approach to promoting these financial products.