The U.S. Securities and Exchange Commission (SEC) has once again postponed making a decision on the highly anticipated spot Ethereum (ETH) ETF proposed by Grayscale. In a recent announcement, the SEC has called for public input on the proposal, signaling a delay in the final decision until May.
Request for Public Comments
On the regulator’s official website, a notice was published requesting the public’s perspective on how the SEC should proceed with Grayscale’s application. The SEC’s concerns revolve around the Ethereum network’s shift to a Proof-of-Stake (PoS) consensus mechanism and the potential risks due to the concentration of ETH holdings by a limited number of individuals. These factors could potentially expose the proposed fund to fraud and manipulation.
Timeline of Events
Grayscale initially submitted their application for a spot Ethereum ETF back in October 2023. The SEC made its first publication regarding the application on December 5, 2023, with an original decision deadline set for January 25, 2024. However, this date has now been pushed to May, extending the period of uncertainty.
In parallel, the Commission has also delayed the review of similar applications from other financial giants, such as Fidelity and BlackRock, setting new deadlines for these in March.
Anticipated Developments
Despite the delays, industry journalists are optimistic about the eventual approval of spot Ethereum ETFs by the summer of 2024. They believe that upcoming decisions by the Commodity Futures Trading Commission (CFTC) and the SEC will clarify Ethereum’s status, potentially not categorizing it as a security. This speculation is partly based on outcomes from ongoing legal discourse, such as the trial with Binance, where discussions around DAO tokens have suggested that they may be considered securities.
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