Spot Ether ETF Saga Continues: SEC Kicks the Can Down the Road

The United States Securities and Exchange Commission (SEC) has once again delayed its decision on Invesco Galaxy’s application for a spot Ether exchange-traded fund (ETF).

In a filing on May 6, the SEC announced that it would require an additional 60 days to decide whether to approve or disapprove the proposed ETF, setting the next deadline for July 5, 2024.

TLDR

• The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Invesco Galaxy’s application for a spot Ether exchange-traded fund (ETF) until July 5, 2024.
• The SEC has also delayed decisions on applications from other prospective Ether ETF issuers, including BlackRock, Fidelity, Franklin Templeton, Hashdex, and Ark 21Shares.
• VanEck’s Ether ETF application has a final deadline of May 23, which Bloomberg ETF analysts consider the most critical deadline.
• Optimism for the SEC approving a spot Ether ETF has dwindled in recent months, with analysts lowering their estimates of approval chances and expecting all applications to be ultimately denied.
• Despite the consensus among ETF analysts, some Ethereum advocates maintain conviction that the SEC could still approve the funds by VanEck’s final deadline.

This latest delay marks the third time the SEC has postponed its decision on the Invesco Galaxy spot Ether ETF. The agency first delayed making a decision in December 2023 and made a second extension in February 2024.

The proposal for the ETF was initially filed with the SEC on October 20, 2023, and was published in the Federal Register on November 8, 2023.

In its filing, the SEC stated that it finds it appropriate to designate a longer period to issue an order approving or disapproving the proposed rule change, allowing sufficient time to consider the proposed change and the issues raised therein.

The agency has a total of 240 days from the publication date to make extensions before reaching a final decision.

The SEC’s delay in deciding on the Invesco Galaxy spot Ether ETF is not an isolated incident.

In recent months, the agency has delayed decisions on applications from all eight prospective Ether ETF issuers, including prominent financial institutions such as BlackRock, Fidelity, Franklin Templeton, Hashdex, and Ark 21Shares. This series of delays is in line with analyst expectations.

Among the pending applications, VanEck’s Ether ETF has the earliest final deadline, set for May 23, 2024.

Bloomberg ETF analyst James Seyffart considers this deadline the “only one that matters,” as it will likely set the precedent for the SEC’s decisions on the other applications.

However, optimism surrounding the potential approval of a spot Ether ETF has waned in recent months.

In March, senior Bloomberg ETF analyst Eric Balchunas downgraded his odds of SEC approval from 50% to 35%, citing a prolonged period of “radio silence” from the SEC to prospective fund issuers and increasing political pushback against SEC Chair Gary Gensler as reasons for the decreased likelihood of approval.

Seyffart, who was previously “cautiously optimistic” about the pending Ether ETF applications, has also changed his stance. As of March 20, he expects that all applications for an Ether ETF will “ultimately be denied” by the SEC on May 23.

Despite the consensus among ETF analysts, some Ethereum advocates remain hopeful that the SEC could still approve the funds by VanEck’s final deadline.

Anthony Sassano, a prominent Ethereum advocate, maintains his conviction, pointing to the agency’s approval of Ether futures ETF products in 2024 and a recent meeting between the regulator, crypto asset management firm Grayscale, and crypto exchange Coinbase as reasons why the SEC could still grant approval.

The ongoing delays in the SEC’s decision-making process have left the crypto community and financial institutions eagerly awaiting the outcome of the spot Ether ETF applications.

The approval of such a product could potentially lead to increased mainstream adoption and institutional investment in Ethereum, the second-largest cryptocurrency by market capitalization.

As the July 5 deadline for the Invesco Galaxy spot Ether ETF approaches, all eyes will be on the SEC’s decision regarding VanEck’s application on May 23.

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