U.S. SEC delays Grayscale spot Ethereum ETF

Grayscale’s application to convert its trust into a spot Ethereum ETF has been delayed by the U.S. SEC. 

The SEC deferred its decision on a proposed rule change to allow U.S. national exchanges to list and trade spot Ethereum (ETH) ETFs pitched by Grayscale until June 23. 

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1, and the issues raised therein.”

In October, Grayscale submitted a Form 19b-4 with the NYSE Arca, asking the SEC for permission to transition its existing Ethereum Trust (ETHE) into a spot ETH ETF. The firm filed the same process for its GBTC product, which it successfully converted into a spot Bitcoin (BTC) ETF in January. 

Following the SEC’s latest move, Grayscale filed Form S-3 to register under America’s Securities Act to amp efforts for its ETHE offering.

Documents on the Wall Street regulator’s website also showed that a similar application filed by asset manager Franklin Templeton was delayed until June 11, crypto.news reported earlier on April 23. 

Other filings from issuers BlackRock, Fidelity, and VanEck seeking spot Ethereum ETFs were also delayed as the SEC buys time to decide whether to accept or reject these bids. Analysts have surmised that a staking feature added to some applications may concern the SEC’s Chairman, Gary Gensler, who has repeatedly insisted that most crypto assets are securities.

Since then, spot BTC ETFs have amassed over $12 billion in cumulative net inflow despite massive exits from Grayscale’s fund. GBTC outflows reached $1.6 billion earlier this week, losing 50% of previously managed volume.