9 months ago
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The SEC has instituted proceedings that include a call for public comments as it delays a decision on Grayscale’s ETH ETF.
The United States Securities and Exchange Commission (SEC) has announced another delay in its decision to approve or disapprove Grayscale Investments’ proposal for a spot Ethereum (ETH) exchange-traded fund (ETF). In an order published Thursday, the SEC announced its decision to institute proceedings on whether or not to approve the proposal. In addition, the Commission wants interested members of the general public to provide comments on the proposed rule change.
SEC Explains Delay on Grayscale ETH ETF
The SEC notes that instituting these proceedings is appropriate because of the legal and policy issues involved. It also specifies that the Commission has not reached any conclusions regarding the issues, and only wants public comments. For instance, the filing states that the Commission wants to know if people believe that the proposed Trust and Shares would be prone to manipulation. It is also interested in public comments on whether or not the proposal’s specifics are adequately designed to prevent fraud and manipulation. Furthermore, the Commission wants opinions on the liquidity and transparency of the ETH markets, and its general susceptibility to manipulation.
Last month, the SEC announced a delay on approving or disapproving Grayscale’s ETH Trust spot ETF. A December filing shifted the deadline by 45 days, to Thursday, January 25.
A day before, the SEC also revealed a delay in considering BlackRock’s ETH ETF proposal. The Commission said it needed more time to consider the rule change and all issues raised. Similarly, the SEC postponed another ETH ETF proposal, this time from Fidelity Investments.
Varying Views on the Chance of Approval
Interestingly, there are mixed views on the possibility of an ETH ETF. Bloomberg ETF analyst Eric Balchunas says there is a 70% chance that the Commission will permit an ETH ETF by May. Unfortunately, Morgan Creek Capital’s Chief Executive Officer (CEO) Mark Yusko disagrees. According to Yusko, there are factors in play that negatively affect the chance of approval. He mentions that the SEC is generally averse to crypto, as highlighted by Chair Gary Gensler’s publication after the Commission’s approval of spot BTC ETFs. In addition, Yusko says that the SEC might view ETH as a security, which would significantly complicate the chance of approval. Yusko believes the possibility of an approval is “probably say less than 50/50.”
Perhaps the biggest pointer to the chance of an ETF, so far, is Gensler’s comments during a recent media briefing. On Wednesday, Gensler warned that the approval of spot Bitcoin ETFs has no influence or bearing on other crypto ETFs. In the briefing, Gensler said:
“As I said two weeks ago, that which we did with regard to Bitcoin exchange traded products is cabined to this one commodity non-security and shouldn’t be read to be anything other than that.”
According to CoinMarketCap data, ETH is trading at $2,218, after falling more than 10% over the last week. ETH and most of the top 10 altcoins have plunged significantly in the same period with the 9.31% loss in Avalanche (AVAX) as the largest at the time of this writing.
