SEC Drags Its Feet On Spot Ether ETFs — Delays Decision On Proposals From Franklin Templeton, Grayscale

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on spot Ethereum exchange-traded fund (ETF) applications from Grayscale Investments and Wall Street titan Franklin Templeton.

In filings on Tuesday, the SEC said it finds it appropriate to designate a longer period to greenlight or deny a proposed rule change allowing the Cboe BZX Exchange to list and trade shares of Franklin Templeton and Grayscale Ethereum Trusts. The agency will have until June 11 to reevaluate its decision on the Franklin spot ETH ETF, and June 23 for Grayscale’s Ethereum product.

The two companies — along with a handful of other fund managers — are hoping to get the regulatory nod from the SEC so their ether-based products can begin trading on American stock exchanges.

Grayscale applied with the agency to transform its Grayscale Ethereum Trust (ETHE) into a spot ETH ETF back in October, while Franklin Templeton entered the race in February by submitting its filing with the securities regulator.

The SEC greenlighted nearly a dozen spot Bitcoin ETFs in mid-January after a decade of denials. The SEC’s hand was essentially forced by Grayscale’s landmark court victory. The novel ETFs are now trading on stock exchanges and they give traditional investors exposure to the world’s largest cryptocurrency. They have been incredibly successful, fetching massive inflows in the space of months. Now, prominent asset managers want to introduce a similar investment vehicle that would allow investors to purchase shares that track the price of ether.

Spot Ether ETF Approval In May Unlikely

Industry pundits are not too optimistic about the prospects of an ether ETF launching in the U.S. in the near term. Bloomberg’s ETF analyst Eric Balchunas has lowered his estimate of the likelihood of a spot ETH ETF being approved by May from 70% to about 35%.

However, in Hong Kong, multiple issuers said they had received the nod to list spot Ethereum ETFs amid attempts by regulators to turn the former city-state into a crypto hub.

Notably, unlike the spectacular unlock that happened in the United States, which primarily fueled the recent Bitcoin upsurge that has propelled the crypto to current lifetime highs, there are reasons to doubt billions in fresh money will flood the market. As Balchunas has pointed out, there is a gulf between the comparative market size of the U.S. and Hong Kong.

That said, British multinational Standard Chartered sticks to its lofty forecast. It expects the price of Ethereum to register a ballistic rally to the coveted $8,000 mark by the end of the year.