The U.S. Securities and Exchange Commission (SEC) has once again postponed its decision on Grayscale's proposal for a spot Ethereum ETF, extending the review period to June 23 amid heightened scrutiny of cryptocurrency ETF applications. This delay is part of a broader pattern affecting not just Grayscale but other asset managers in the sector.
Grayscale initially filed a Form 19b-4 with NYSE Arca in October to convert its existing Ethereum Trust into a spot ETH ETF. This move followed the successful conversion of its Bitcoin Trust into a spot Bitcoin ETF in January.
Extended Review Due to Regulatory Concerns
The SEC's decision to delay the Ethereum ETF approval is based on the need for further evaluation of the proposal's amendments, which require additional time to assess and resolve any potential issues. The regulatory body is conducting a thorough review to ensure that the proposal adheres to all necessary regulatory standards.
This setback is not unique to Grayscale. Other prominent financial institutions, including Franklin Templeton, BlackRock, Fidelity, and VanEck, have also experienced delays with their cryptocurrency ETF applications. Franklin Templeton's application has been postponed until June 11.
Grayscale’s Continued Efforts Towards Approval
In response to the SEC's latest action, Grayscale has taken steps to enhance its application, including submitting a Form S-3 under the U.S. Securities Act. These efforts reflect the company’s commitment to securing approval for the Ethereum ETF.
The ongoing delays in the approval process for spot Ethereum ETFs highlight the regulatory concerns surrounding the crypto market. SEC Chairman Gary Gensler has emphasized that many crypto assets are viewed as securities, influencing the cautious approach taken by the SEC towards these ETFs.
Despite these regulatory challenges, the cryptocurrency ETF market remains active. Following the approval of its spot Bitcoin ETF, Grayscale reported over $12 billion in cumulative net inflows. However, this has coincided with significant outflows from its Bitcoin Trust, which saw a 50% reduction in managed volume over the current week.
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