SEC Delays Spot Ethereum ETF Decisions

Nasdaq’s proposed rule change to list and trade options on BlackRock’s iShares Ethereum Trust (ETHA) has been postponed by the U.S. Securities and Exchange Commission (SEC).

The SEC’s judgment, initially anticipated to be made by September 26, has been postponed until November 10.

The agency stated in a press release on Thursday that the postponement enables it to evaluate the potential effects of such a move on market stability.

Spot Ethereum ETF Alternatives to Enhance Market Liquidity

The divide between digital assets and conventional finance could be further bridged by approving options for a spot Ethereum exchange-traded fund (ETF).

According to supporters, introducing such options would stimulate bullish momentum and provide the market with additional liquidity.

If approved, the options would be subject to the same regulatory standards as other ETF-linked derivatives.

This would expand the selection of investment instruments that are accessible to both institutional and retail investors, affording them new opportunities to speculate on or mitigate against the fluctuations in the price of Ethereum.

The proposal, submitted on July 22, seeks to amend current regulations to enable trading options on BlackRock’s iShares Ethereum Trust.

The trust is intended to function as a passive investment vehicle, with Ethereum managed by Coinbase and currency reserves maintained by The Bank of New York Mellon.

Unlike other cryptocurrency funds, this trust focuses solely on providing exposure to Ethereum’s price movements and does not engage in staking or other proof-of-stake validation activities.

The SEC’s decision to postpone is not uncommon.

The regulator is authorized to extend its review period for a maximum of 90 days to conduct a comprehensive assessment of the potential risks and benefits of the proposal under Section 19(b)(2) of the Securities Exchange Act.

The decision was made shortly after the Securities and Exchange Commission (SEC) approved options trading for BlackRock’s iShares Bitcoin Trust (IBIT), followed by amendments to resolve concerns about market manipulation and excessive risk-taking.

The SEC has postponed its decision on a distinct proposal by NYSE American LLC and the ruling on BlackRock’s Ethereum options.

The regulatory body is meticulously scrutinizing all aspects of Ethereum-related financial products, as evidenced by the proposal to list and trade options on Bitwise’s Ethereum ETF, the Grayscale Ethereum Trust, and the Grayscale Ethereum Mini Trust.

The Ethereum ETF market has experienced substantial fluctuations in tandem with the uncertainty surrounding the SEC’s decision.

On Monday, Ethereum ETFs experienced their most significant net outflows since July, with withdrawals exceeding $79 million.

The most significant single-day outflow since the introduction of spot Ether ETFs earlier this year was observed by Grayscale’s spot Ether ETF (ETHE), which led to the decline with an outflow of $80.6 million.

Spot Bitcoin ETFs Receive Inflows

On Tuesday, spot Bitcoin ETFs in the United States encountered a divergent trend, with net inflows totaling $135.95 million.

This was the fourth consecutive day of positive inflows, during which 12 funds amassed over $390 million.

BlackRock’s IBIT drove the surge, attracting $98.89 million in net inflows, the highest since August 26. Bitwise’s BITB followed with $17.41 million, and Fideliity’s FBTC experienced $16.80 million in inflows.

In addition, Ethereum ETFs experienced a rebound on Tuesday, with a total daily inflow of $62.51 million, following the drastic outflows on Monday.

ETHA, which BlackRock owns, was the primary beneficiary of the recovery, generating $59.25 million in net inflows.

Invesco’s Ether ETF and VanEck’s ETHV also posted modest gains of $1.32 million and $1.94 million, respectively.