SEC Postpone Timeline for BlackRock’s Spot Ethereum ETF

A decision on BlackRock’s proposed spot Ethereum (ETH) exchange-traded fund (ETF) application has been postponed a day ahead of the deadline by the United States Securities and Exchange Commission (SEC), citing the need for more time to review the proposed rule change.

 Overview

 According to the SEC’s new resolution, the deadline for BlackRock’s spot Ethereum ETF is set to be March 10 2024, when the Commission will approve, disapprove, or institute proceedings to decide whether the proposed rule change should be disapproved. The SEC’s Assistant Secretary, Sherry Haywood, suggested that the publication of notice of the filing of a proposed rule change be within 45 days as provided by Section 19(b) (2) of the Act4.

Haywood said, “Or within such a longer period of 90 days as the Commission may designate if it finds such a longer period to be appropriate.” SEC’s assistant secretary added, “The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change and the issues raised therein.”

The SEC made the delay one day ahead of the January 25 2024 deadline. This is the first of several delays the SEC can exercise across 240 days.

 More Delays Expected in Spot Ethereum ETF

On November 16, 2023, with the SEC, BlackRock filed for its spot Ethereum ETF, called the iShares Ethereum Trust. In June 2023, BlackRock filed for the iShare Bitcoin Trust, which moved the markets. This initial deadline comes nearly 45 days after Nasdaq filed for an iShares Ethereum Trust on BlackRock’s behalf in December.

In response to the delay, Bloomberg Intelligence ETF analyst James Seyffart suggested that the SEC’s delay decision was anticipated. In a post on X, Seyffart wrote:

Spot Ethereum ETF Delays will continue to happen sporadically over the next few months. Next date that matters is May 23rd https://t.co/2zBBvHkrVk

— James Seyffart (@JSeyff) January 24, 2024

In November 2023, Fidelity applied for the Fidelity Ethereum Fund, but last Thursday, Fidelity’s proposed spot Ethereum ETF decision was delayed by the SEC to March 5, 2024.

Regarding Fidelity’s application, Seyffart commented that the SEC’s delayed decision was also expected. At the beginning of 2024, the SEC authorised 11 spot Bitcoin ETFs to start trading, which sparked some industry talks about a spot Ethereum ETF next. Fidelity and BlackRock joined the race for a spot in Ethereum ETF last year, a month before they applied for the spot products and ether futures ETFs went live. 

 Optimism about Spot Ethereum ETF Approval

One of SEC’s commissioners, Hester Peirce, known as “Crypto Mom”, assured applicants that a court battle would not be necessary to convince the Commission to approve the spot Ethereum ETFs. Peirce said:

“We shouldn’t need a court to tell us that our approach is ‘arbitrary and capricious’ in order for us to get it right.”

Global Head of Digital Assets at Goldman Sachs, Mathew McDermott, expressed optimism about approving spot Ether ETFs in the coming months. McDermott highlighted the critical factor determining the approval, “a big question naturally centres around whether it’s perceived to be a security or not.” McDermott suggested that it will ultimately be determined whether it gets approved. McDermott also commented on the nature of investing in spot Bitcoin ETFs compared to directly investing in crypto.

While others are optimistic about spot Ethereum ETFs, some are less confident. CEO of Morgan Creek Capital, Mark Yusko, predicted a less than 50% chance for spot Ethereum ETF approval, citing that the SEC remains hostile towards cryptocurrency.