SEC Delays Ethereum ETF Decision to November

The United States Securities and Exchange Commission has postponed its verdict on approving options trading for spot Ethereum ETFs

The SEC I stated in two distinct filings that it requires ample time to evaluate the proposed rule change” that would enable Nasdaq ISE LLC and NYSE American LLC to provide options for spot Ethereum ETFs.

At present, the commission is considering the sanction of the following funds: Bitwise’s Ethereum ETF (ETHW), Grayscale’s Ethereum Trust (ETHE), BlackRock’s iShares Ethereum Trust (ETHA), and Ethereum Mini Trust (ETH).

In August 2024, BlackRock submitted a rule change application for its ETHA product, and Bitwise and Grayscale followed suit by filing through NYSE American LLC in the same month.

Initially, the regulator anticipated a definitive decision by September 26 and 27, 2024. However, the review period has been extended to November 10 and 11, 2024.

This is the norm under Section 19(b)(2) of the Securities Exchange Act. It allows the regulator to take more time to evaluate these decisions and is consistent with its cautious stance toward ETPs that are related to crypto.

In the interim, Nasdaq was permitted to list IBIT options under its ongoing listing standards after the regulator authorized options on BlackRock’s iShares Bitcoin Trust on September 20. Nevertheless, the approval was granted following an almost eight-month review period.

Throughout this procedure, Nasdaq was required to submit numerous amendments to furnish supplementary information concerning Bitcoin-based ETPs, which commenced on January 11, 2024.

These amendments were essential for the SEC’s comprehensive review, designed to resolve all regulatory concerns regarding market manipulation and other risks before approval.

The SEC’s extension is implemented to decrease interest in spot Ethereum ETFs, as the nine funds have experienced outflows for seven consecutive weeks. These outflows have surpassed $620 million to date.

Conversely, spot Bitcoin ETFs have garnered over $17 billion in inflows since their inception.

In other news, BlackRock recently submitted an amendment requiring its custodian, Coinbase, to process Bitcoin ETF withdrawals within 12 hours.

This modification was implemented in response to the increasing uncertainties among investors regarding Coinbase’s transparency in managing Bitcoin assets.

The expedited withdrawal process ensures that investors are effectively managed properly through “paper BTC” or IOUs.