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The U.S. Securities and Exchange Commission (SEC) has revealed a postponement in its decision regarding Franklin Templeton’s proposed spot Ethereum ETF, pushing the deadline to June 11, 2024. This information was disclosed in a filing made public today, leaving the prospects of this financial product uncertain for now.
The proposed ETF, which was initially submitted in February, aims to track the price of ether and plans to use Coinbase Custody Trust Company and the Bank of New York Mellon as custodians.
Franklin Templeton’s Spot Ethereum ETF Decision Delayed: SEC Extends Deadline to June 2024
The SEC’s choice to prolong the review period arises from the necessity for more time to comprehensively assess the proposed rule changes and the intricate issues related to the classification of Ethereum and its appropriateness for a spot ETF.
According to the SEC, “The Commission finds it suitable to designate a longer period within which to take action on the proposed rule change so that it has adequate time to consider the proposed rule change and the issues raised therein.”
This careful strategy reflects a similar delay for Grayscale’s Ethereum Trust proposal, which aims to transition into a spot ether ETF following the successful conversion of its Bitcoin trust earlier this year.
This action occurs amid a rise in applications for spot cryptocurrency ETFs, with major players such as Fidelity and BlackRock entering the competition.
Initially, analysts like Bloomberg’s James Seyffart expected a decision in May, noting, “Many analysts have speculated that the SEC will reach a final decision on whether to approve or deny a spot Ether ETF for listing and trading on U.S. exchanges in May, during deadlines for applications from several asset managers.”
My cautiously optimistic attitude for ETH ETFs has changed from recent months. We now believe these will ultimately be denied May 23rd for this round. The SEC hasn’t engaged with issuers on Ethereum specifics. Exact opposite of #Bitcoin ETFs this fall. https://t.co/TyAzAOrAC5
— James Seyffart (@JSeyff) March 19, 2024
However, the recent delays from the SEC have moderated expectations. Seyffart himself conveyed skepticism, indicating that the current round of Ether ETF applications might ultimately be rejected.
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Bloomberg analyst Eric Balchunas adjusted his approval likelihood estimate from 70% to a more cautious 35%, underscoring the increasing uncertainty.
Despite the regulatory challenges and diminished expectations, the market’s demand for cryptocurrency investment vehicles remains robust.
Latest data shows US Spot #Bitcoin ETFs with a total net inflow of $12.39B and daily net inflow of $62M on 22 April. pic.twitter.com/4AdnI4sqJG
— Crypto.com Research & Insights (@cryptocom_rni) April 23, 2024
The SEC’s prior approval of spot Bitcoin ETFs in January 2024 resulted in a significant influx of capital, with these ETFs drawing a cumulative net inflow of $12.39 billion as of this writing.
Approval Uncertain for Spot ETH ETFs as SEC Takes Cautious Approach
Compounding the complexities surrounding spot Ethereum ETFs, the SEC has recently launched a public comment period regarding their potential approval. Specifically, the commission is soliciting feedback on proposals from Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum.
This action follows the SEC’s earlier approval of several spot Bitcoin ETFs in January 2024. However, SEC Chair Gary Gensler warned against interpreting this as an endorsement of crypto assets or their regulatory status.
Despite initial enthusiasm, the chances of a spot Ethereum ETF approval appear to have significantly diminished. Industry figures such as VanEck CEO Jan van Eck have expressed doubts about the approval prospects, suggesting that his firm’s application may face rejection.
CoinShares CEO Jean-Marie Mognetti echoed this sentiment, forecasting a prolonged period of inactivity from the SEC on pending applications.
Adding to the pressure, Democratic Senators Laphonza Butler and Jack Reed have urged SEC Chair Gensler to proceed with caution in approving crypto-based ETFs, citing potential risks to investors and concerns regarding insufficient regulatory protections.
The post SEC Delays Decision on Franklin Templeton’s Spot Ethereum ETF Application appeared first on Cryptonews.
