SEC postpones decision on Ethereum ETF options until November

The US Securities and Exchange Commission has delayed its decision on approving options trading for ethereum spot ETFs.

In two separate filingsThe SEC said it needs “sufficient time to consider the proposed rule change” that would allow Nasdaq ISE LLC and NYSE American LLC to offer options trading on spot ethereum ETFs.

Currently, BlackRock's iShares ethereum Trust (ETHA), Bitwise's ethereum ETF (ETHW), Grayscale's ethereum Trust (ETHE), and ethereum Mini Trust (eth) are the funds seeking approval from the commission.

BlackRock filed for rule changes for its ETHA product in August 2024, while Bitwise and Grayscale followed with their respective filings through NYSE American LLC during the same month.

A final decision was initially expected on September 26-27, 2024, but the regulator has extended the review period until 10 and 11 November 2024.

This is a standard occurrence under Section 19(b)(2) of the Exchange Act. It gives the regulator more time to consider these decisions and aligns with its cautious approach to crypto-related ETPs.

Meanwhile, on September 20, the regulator approved options on BlackRock’s iShares bitcoin Trust, allowing Nasdaq to list options on IBIT under its continuous listing standards. However, the approval came after a review period of nearly eight months.

Nasdaq had to resubmit several amendments throughout this process, beginning on January 11, 2024, to provide additional information about bitcoin-based ETPs. These amendments were necessary for the SEC’s thorough review, ensuring that all regulatory concerns about market manipulation and other risks were addressed prior to approval.

The SEC’s extension comes amid waning interest in ethereum spot ETFs, with nine funds experiencing seven consecutive weeks of outflows. To date, these outflows have exceeded $620 million. In contrast, bitcoin spot ETFs have seen over $17 billion in inflows since launch.

In other news, BlackRock recently… filed an amendment requiring its custodian, Coinbase, to process bitcoin ETF withdrawals within 12 hours.

This change came in response to growing concerns among investors about Coinbase's transparency in handling bitcoin assets. The faster withdrawal process is intended to reassure investors that their holdings are being managed properly and not through “paper btc” or promissory notes.