The United States Securities and Exchange Commission has delayed its decision on whether to approve or reject a spot Ethereum traded fund (ETF) proposed by Grayscale Investments. Instead, it has asked for public comments on the proposal.
The Commission announced this decision on Jan 25. It said it would start a process to determine if it should accept or reject a proposed rule change. This proposed rule change would allow the New York Stock Exchange Arca to list and trade shares of the Grayscale Ethereum Trust. Opening the proposal up for public comment will extend the deadline for a final decision by an additional 35 days after publishing in the Federal Register.
“The SEC statement invited interested persons to submit written data, views, and arguments regarding whether the proposed rule change should be approved or disapproved.”
The SEC’s call for public input came just 15 days after the Commission approved the listing of shares of spot Bitcoin ETFs on US exchanges for the first time. One of the approved ETFs was an offering from the Grayscale Bitcoin Trust.
Since its launch, the GBTC Bitcoin Trust has witnessed some of the highest outflows among the 10 approved spot BTC ETFs. These outflows reached approximately $4.4 billion over the first nine trading days.
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Grayscale Investments originally filed with the SEC to convert shares of its Grayscale Ethereum Trust into a spot Ether ETF back in Oct. This application added Grayscale to the list of companies awaiting a final decision from the securities regulator on proposed spot crypto ETFs.
Then, on Jan 25, the SEC extended the timeline for its decision on BlackRock’s spot Ethereum ETF until March. Many industry experts speculate the Commission will take the full 240 days regulations allow to make a final determination.
The SEC has proceeded cautiously with approving any spot crypto ETFs, citing concerns around volatility, liquidity, custody, and potential for manipulation in the underlying crypto markets. However, the recent approval of spot Bitcoin ETFs suggests the Commission may be warming to allowing spot crypto ETFs if they meet certain transparency and investor protection standards.
The SEC will likely consider public comments in shaping the final decision. Regulators will decide whether to allow a spot Ether ETF to come to market based on its level of investor protection.
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