SEC Postpones Spot ETFs Verdict, Keeps Market On Edge

• The Security and Exchange Commission will stall its resolution on spot ETFs.
• The companies involved and the cryptocurrency community still await a final decision.
• An increasing number of financial institutions are filing applications for spot ETFs. 

The cryptocurrency industry has been abuzz with anticipation for the Securities and Exchange Commission’s ( SEC ) nod on spot ETFs, but the regulator’s seemingly prolonged decision-making process has left investors and institutions on edge.

As the original deadline set for the SEC’s decision approaches, the commission has given an update on its stance.

SEC Defers Spot ETFs Decision

On Wednesday, November 15, the SEC announced its decision to extend its evaluation period of investment company Grayscale LLC’s spot Ethereum ETF application.

Citing the need for additional time to thoroughly assess the application and associated concerns, the commission has prolonged the deadline for its decision by an additional 45 days, now scheduled for January 1, 2024.

“The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.”

The extension was framed as a way to provide the SEC with the required timeframe to consider the intricacies of the proposal and make an informed decision on its approval or disapproval. 

The SEC’s decision to delay also extends to Brazilian-based crypto asset management firm Hashdex, elongating the set deadline for the approval of its spot Bitcoin ETF application.

Grayscale and Hashdex’s Spot ETFs Filing

In September, Grayscale Investments filed a request with the Securities and Exchange Commission to convert its Grayscale Ethereum Trust (GETH) into a spot Ethereum ETF. The commission initially rejected the motion, prompting Grayscale to challenge the decision through a court filing .

In a favorable turn for Grayscale on October 24th, the United States Court of Appeals for the District of Columbia Circuit mandated the commission to revoke its decision and review the company’s filing. 

Subsequently, more financial institutions including BlackRock and Fidelity joined in the race, filing applications for spot ETFs with the SEC and mounting anticipation for approval. Hashdex followed suit with an application with the SEC, seeking approval to convert its existing Bitcoin futures ETF into a Bitcoin Spot ETF.

In a bid to address the commission’s concerns regarding potential market manipulations, the company opted for an alternative strategy, proposing to forge a custody-sharing agreement with CME for a duly regulated market.

Despite the occasional inaccurate news that has emerged regarding the SEC’s approval, both firms still await a final resolution from the commission.

On the Flipside

• On November 9, asset management firm BlackRock filed paperwork to register its iShares Ethereum Trust entity in Delaware, raising speculations of an imminent Spot Ethereum ETH filing. 
• The Securities and Exchange Commission has received over 12 applications for spot Bitcoin ETFs this year.
• Grayscale’s surging Solana Trust (GSOL) is fueling predictions of a potential Solana ETF , although it seems uncertain.

Why This Matters

The approval of spot ETFs, not only for Hashdex and Grayscale but also for major players like BlackRock and Fidelity is being closely watched, and the SEC’s decision to delay adds to the mounting anticipation for the approval of the highly anticipated spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs).

The SEC and Hashdex recently held a meeting to deliberate on their application for the Bitcoin Spot ETF. Read more: 

What Happened at the SEC and Hashdex Bitcoin ETF Meeting  

Troubled Hong Kong-based exchange OSL is experiencing revitalization as new partnerships inject cash. Find out more: 

OSL Bags $90M Investment Post-Sell Off Deliberations