Overview of the SEC’s Decision
The United States Securities and Exchange Commission (SEC) has announced a delay in its decision regarding the approval of options trading for spot Ethereum ETFs. In two recent filings, the SEC stated it requires additional time to evaluate the proposed rule changes that would enable Nasdaq ISE LLC and NYSE American LLC to offer options trading for these funds.
Funds Seeking Approval
Currently, several prominent funds are seeking SEC approval for options trading, including:
- BlackRock’s iShares Ethereum Trust (ETHA)
- Bitwise’s Ethereum ETF (ETHW)
- Grayscale’s Ethereum Trust (ETHE)
- Ethereum Mini Trust (ETH)
BlackRock submitted its rule change application for ETHA in August 2024, followed by filings from Bitwise and Grayscale through NYSE American LLC later that same month.
Revised Timeline for Decision
The SEC had initially planned to make a final decision by September 26 and 27, 2024. However, the review period has been extended to November 10 and 11, 2024. This extension aligns with Section 19(b)(2) of the Securities Exchange Act, which allows the SEC more time to deliberate on such decisions, reflecting its cautious approach to cryptocurrency-related exchange-traded products (ETPs).
Recent SEC Approvals
In a related development, on September 20, the SEC approved options trading on BlackRock’s iShares Bitcoin Trust, allowing Nasdaq to list IBIT options. This approval followed an extensive eight-month review process, during which Nasdaq had to refile multiple amendments starting from January 11, 2024, to address regulatory concerns related to market manipulation and other risks.
Market Trends and ETF Performance
The SEC’s delay comes at a time when interest in spot Ethereum ETFs is declining. The nine funds in this category have faced seven consecutive weeks of outflows, totaling over $620 million. In contrast, spot Bitcoin ETFs have seen a robust inflow of over $17 billion since their launch.
Additional Developments from BlackRock
In other news, BlackRock has recently filed an amendment requiring its custodian, Coinbase, to process Bitcoin ETF withdrawals within 12 hours. This move aims to address rising investor concerns regarding Coinbase’s transparency in managing Bitcoin assets. The expedited withdrawal process is designed to reassure investors that their holdings are being effectively managed, rather than relying on “paper BTC” or IOUs.
Conclusion
The SEC’s cautious approach to approving options trading for spot Ethereum ETFs highlights the ongoing regulatory scrutiny in the cryptocurrency space. As the market dynamics shift, investors will need to stay informed about these developments and their potential impacts on the crypto landscape.
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