SEC Delays Decision On Grayscale’s Ethereum ETF – Here’s The New Deadline

The United States Securities and Exchange Commission (SEC) has announced an extension – yet again – of the deadline for asset management firm Grayscale’s Ethereum Futures Trust exchange-traded fund (ETF). Initially published for comment in the Federal Register on October 3, 2023, the SEC claims to be extending the deadline to have “sufficient time to consider the proposed rule change.”

Final Deadline For Grayscale’s Futures Ethereum ETF

According to a March 22 filing, the SEC disclosed that it will prolong the decision-making process for Grayscale’s Ethereum Futures ETF. The commission has now moved the deadline from March 31 to May 30 to decide whether or not to approve the investment product.

A part of the SEC’s filing read: 

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 and the issues raised therein. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,10 designates May 30, 2024, as the date by which the Commission shall either approve or disapprove the proposed rule change.

James Seyffart, a Bloomberg ETF analyst, did not express surprise at this deadline extension. “There’s the delay order for Grayscale’s Ethereum Futures ETF Filing — as expected,” the analyst said in his post on the X platform.

In November, Seyffart said he believes that Grayscale’s application for an Ether Futures ETF is “nothing but a trojan horse” to get approval for its spot ETH exchange-traded product. Hence, it would be interesting to see how this latest delay influences the clearance of the spot ETH ETF, especially considering the slim odds of approval.

The SEC delayed its decision on whether to approve Grayscale’s spot Ethereum ETF earlier in January while also opening the application to public comments. In the most recent development, the asset management revised its 19b-4 form in a bid to force the regulator’s hand.

Approval Of ETH Spot ETF Seems Very Unlikely: Alex Thorn

Alex Thorn, Galaxy Digital’s head of research, has said the approval of the Ethereum spot ETFs is looking very unlikely at the moment. This reasoning is based on the SEC’s subpoena of crypto firms and lack of engagement with potential ETF issuers.

According to a recent report, the SEC sent subpoenas to various crypto companies regarding their relationships with the Ethereum Foundation. 

Thorn posits that the SEC could be investigating whether the original Ethereum ICO (Initial Coin Offering) was an unregistered securities offering rather than classifying the secondary trading of Ether today as securities trading.

The analyst mentioned that it is unclear how this probe alone hurts the chance of ETH ETF approval. However, he believes that when this is combined with the fact that the SEC is not actively communicating with applicants, the authorization of the ETFs in May seems very unlikely.