The United States Securities and Exchange Commission (SEC) has announced an extension in the decision-making process for Fidelity's proposed ethereum exchange-traded fund (ETF). According to the official statement Posted on January 18, 2024, the SEC decided to extend the review period by 45 days. This extension is intended to ensure that the SEC has “sufficient time to consider the proposed rule change and the issues raised therein.”
The Fidelity ethereum Fund, filed under the Cboe BZX Exchange, Inc. self-regulatory organization, seeks to trade stocks under BZX Rule 14.11(e)(4), specifically focusing on commodity-based fiat stocks. Initially released for comment on December 6, 2023, the proposal has now moved its crucial decision date to March 5, 2024, as the SEC uses the entire designated period for a more thorough review.
James Seyffart, Bloomberg ETF analyst, does not express surprise at this development. In his X (formerly Twitter) post on January 18, he stated: “The Fidelity ethereum ETF was delayed just now. Completely expected. In my opinion, the dates that really matter are the end of May,” while emphasizing the importance of the end of May as the critical period, in particular referencing the SEC's final May 23 deadline for the Ether ETF. by VanEck.
ethereum ETF Approval Has Good Chances
While some analysts remain hopeful about the SEC's possible simultaneous approval of multiple Ether spot ETFs just before the first final deadline, mirroring its strategy for bitcoin spot ETFs, skepticism remains. Bloomberg's Eric Balchunas projected a 70% chance that an ethereum spot ETF will be approved in May, considering the multiple applications awaiting the SEC's verdict.
Joe Carlasare, digital asset lawyer voiced Confidence in the eventual approval of an ethereum spot ETF within this year. In a detailed analysis on X, he outlined the key factors that should theoretically favor an approval: “eth futures are already traded on the CME. The SEC has already approved eth futures ETFs. The CME has identical shared surveillance arrangements for btc and eth futures. “The correlation of eth futures to spot is over 90% (same as btc).”
According to him, the regulated futures market of significant size is the main reason why the SEC approved bitcoin spot ETFs. “Therefore, it would be arbitrary and capricious to treat the eth spot and futures markets differently (see Grayscale v SEC),” Carlasare states, adding that “the SEC does not like to pick winners.” “I think they would prefer two digital asset spot ETFs rather than just one.”
Adding to the discussion, Nate Geraci, president of ETF Store and co-founder of the ETF Institute, commented on the components needed for approval of a spot eth ETF, saying: “CME-traded ether futures + CME-traded ether futures ETF approval + Grayscale court win + bitcoin ETF approval spot = spot ether ETFs must be approved.” This statement suggests a positive outlook, considering that all parts of their formula are already in place.
Contrasting these optimistic perspectives, Will Clemente III introduced a note of caution last week, reflecting on a recent statement from SEC Chairman Gary Gensler: “Gensler just said in his statement that btc is the only crypto product, so expectations are not that high for the approval of a btc ETF. eth, but the market loves narratives to capture. about.”
At the time of this publication, eth was trading at $2,470.
Featured image created with DALL·E, chart from TradingView.com
