In a recent announcement, the U.S. Securities and Exchange Commission (SEC) has extended the review period for Fidelity’s proposed Ethereum exchange-traded fund (ETF). The decision, revealed on January 18, 2024, grants an additional 45 days for the SEC to thoroughly assess the implications of the ETF. The move aims to ensure that the regulatory body has ample time to consider the proposed rule change and address raised concerns.
Fidelity’s Ethereum Fund, filed through the self-regulatory organization Cboe BZX Exchange, Inc., is seeking approval to trade shares under BZX Rule 14.11(e)(4), focusing specifically on Commodity-Based Trust Shares. Initially open for public comment on December 6, 2023, the decision date has now been pushed to March 5, 2024, as the SEC exercises its prerogative for a more comprehensive review.
James Seyffart, an ETF analyst at Bloomberg, expressed little surprise at this development. In a post on January 18, he remarked, “Fidelity Ethereum ETF delayed just now. Completely expected. Dates that really matter are late May in my view,” highlighting late May as a critical period, especially with reference to the SEC’s final deadline of May 23 for VanEck’s Ether ETF.
Analysts remain cautiously optimistic about the SEC’s potential simultaneous approval of multiple spot Ether ETFs just before the crucial May deadlines. Eric Balchunas of Bloomberg projected a 70% likelihood of an Ethereum spot ETF approval in May, considering the numerous applications awaiting the SEC’s verdict.
Digital asset lawyer Joe Carlasare expressed confidence in the eventual approval of an Ethereum spot ETF within the year. In a detailed analysis, he outlined key factors favoring approval, such as the existence of ETH Futures trading on the CME and the SEC’s prior approval of ETH futures ETFs. Carlasare emphasized that treating ETH futures and spot markets differently would be arbitrary and capricious, citing the correlation of over 90% between ETH futures and spot markets.
Nate Geraci, President of the ETF Store and co-founder of the ETF Institute, contributed to the positive outlook, stating, “CME-traded ether futures + CME-traded ether futures ETF approval + Grayscale court victory + spot bitcoin ETF approval = spot ether ETFs should be approved.” This comprehensive formula suggests a favorable landscape, with all necessary components seemingly in place.
However, not all voices in the market share this optimism. Will Clemente III recently introduced a note of caution, referencing a statement by SEC Chairman Gary Gensler. Gensler indicated that Bitcoin (BTC) is currently the only recognized crypto commodity, leading to lower expectations for the approval of an ETH ETF. Clemente pointed out that while Gensler’s stance may dampen expectations, the market often grasps onto narratives, creating room for potential surprises.
James Seyffart, a Bloomberg ETF analyst, expressed little surprise at the SEC’s decision, stating in a recent social media post, “Fidelity Ethereum ETF delayed just now. Completely expected. Dates that really matter are late May in my view,” emphasizing the significance of late May, particularly in reference to the SEC’s final deadline of May 23 for VanEck’s Ether ETF.
Analysts and industry experts remain cautiously optimistic about the potential approval of Ethereum spot ETFs. Bloomberg’s Eric Balchunas projected a 70% likelihood of an Ethereum spot ETF approval in May, considering the multiple applications awaiting the SEC’s verdict.
Digital asset lawyer Joe Carlasare offered a detailed analysis, expressing confidence in the eventual approval of an Ethereum spot ETF within the year. He highlighted key factors favoring approval, such as the existence of ETH Futures trading on the CME, previous SEC approval of ETH futures ETFs, and a high correlation between ETH futures and spot prices.
As the crypto community eagerly awaits regulatory decisions, the market dynamics and regulatory landscape continue to evolve. The SEC’s decision to extend the review period for Fidelity’s Ethereum ETF underscores the careful approach taken by regulatory authorities in evaluating the rapidly expanding digital asset market.
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