Spot Ethereum ETF Proposals Extended Review by SEC

The race to approve spot Ethereum ETFs in the United States has taken another round, with the Securities and Exchange Commission (SEC) delaying a decision on applications from major asset managers Grayscale Investments and Franklin Templeton.

TLDR

Grayscale has filed an SEP S-3 form with the SEC, aiming to convert its Ethereum Trust (ETHE) into a Spot Ethereum ETF. Grayscale has filed an S-1 following a similar move for the Mini Bitcoin ETF. The SEC has delayed its decision on Greyscale's and Franklin Templeton's Spot Ethereum ETF applications until June 23 and June 11, respectively. The SEC noted that more time is needed to consider the proposed rule changes and the issues raised therein. Analysts are expressing disappointment over the SEC's approval of spot Ethereum ETFs, Ethereum staking behavior and the SEC chairman's stance on crypto assets as securities.

Grayscale, a prominent player in the crypto space, has been actively pursuing the conversion of Ethereum Trust (ETHE) to a Spot Ethereum ETF. In a significant move, the company has filed a Form S-3 with the SEC, a key step in its strategy to seek approval of the Spot Ethereum ETF app. By submitting this form, Grayscale is making itself available to the SEC for necessary documentation to consider its proposal.

Grayscale has filed an S-1 filing for the Mini Ethereum ETF, marked “ETH.” This was in March when the asset manager filed an S-1 for a small Bitcoin ETF, under the symbol “BTC,” which is still pending SEC approval.

Today, we filed a registration statement on Form S-3 to register shares of Greyscale Ethereum Trust (OTCQX: $ETHE) under the Securities Act of 1933. This is another important step in registering ETHE as an ETF*. (1/6) pic.twitter.com/Siy0fUkXTl

— Grayscale (@Grayscale) April 23, 2024

Greyscale's efforts extend beyond the regulatory register, as the company is actively pursuing the listing of Ethereum Trust on the NYSE Arca exchange as a spot Ethereum ETF. This includes NYSE Arca's Form 19b-4, with Greyscale's Form S-3 filing. If approved, Ethereum Trust's shares will trade under the symbol “ETHE,” subject to the effectiveness of the NYSE Arca application and filing on Form S-3.

However, despite Greyscale's proactive approach, the SEC delayed decisions on both Greyscale's and Franklin Templeton's applications. The regulator pushed back the deadline for Greyscale's application to June 23 and Franklin Templeton's to June 11, citing the need for more time to consider the proposed rule changes and the issues raised therein.

The delay has raised speculation and sentiment among industry players, with some expressing concern over insufficient involvement from SEC staff. They interpret this as a condition to deny the approaching deadline. While some issuers remain hopeful citing the similarities between Ethereum and Bitcoin ETF conditions, others are less optimistic.

The SEC is once again dragging its feet on Ethereum ETF proposals, delaying decisions on applications from both Grayscale and Franklin Templeton. Click the link to read:

– Decrypt ???? (@decryptmedia) April 23, 2024

Critics point to unresolved issues surrounding Ethereum's stock nature, noting that these complexities could hinder approval. There is also speculation about the position of SEC Chairman Gary Gensler, as some believe he will not allow Spot Ethereum ETFs and may find new grounds for rejection, similar to the legal battle over Spot Bitcoin ETFs, which could lead to renewed lawsuits from Greyscale.

Analysts at investment bank JP Morgan estimate that the spot Ethereum ETF has less than a 50% chance of approval by the May deadline. This cautious attitude reflects the SEC's commitment to thoroughly scrutinize filings to ensure adequate protection of investors' interests.

While Bitcoin ETFs have made their debut on the US markets, their Ethereum counterparts are still waiting their turn. The SEC's decision, whether positive or negative, will undoubtedly have a significant impact on the crypto industry and democratize the use of these digital assets for the general public.