The U.S. Securities and Exchange Commission (SEC) has delayed the decision on BlackRock's Ethereum spot exchange-traded fund (ETF) to 10 March 2024. The decision delay is due to the SEC needing extra time to review regulatory changes and potential issues.
"The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein," said a new SEC filing on Wednesday (01/24/2024).
BlackRock CEO Larry Fink mentioned in CNBC interview on Friday (01/12/2024), he thinks having an Ethereum ETF would be valuable. He also said that approving these funds is just a step toward tokenization.
Other asset management firms also have filed for spot Ethereum ETFs with the aim that this investment vehicle will provide public exposure to the second-largest cryptocurrency by market capitalization, Ethereum (ETH). At the time of publication, Ethereum's price stands at $2,214 with a market capitalization of $266.18 billion.
However, all the spot Ethereum ETF's applications also be delayed as well. Recently, the SEC also delayed the application for Fidelity's Ethereum Spot ETF on Thursday (18/01/2023). They cited the same reasons for the delay. BlackRock and Fidelity both submitted their applications in November, a month after the approval of ETFs for Ethereum futures.
Is Ethereum a Security or Commodity?
SEC Chairman, Gary Gensler has repeatedly refused to confirm whether Ethereum is classified as a security or a commodity. This statement was made leading up to the congressional hearing (04/18/2023). Before in the chairman position, Gensler stated that the regulator considered Ethereum "sufficiently decentralized" to not qualify as a security. At that time, he referred to a speech by former SEC Director of Corporate Finance William Hinman in July 2018.
Once, Gensler has expressed his skepticism regarding crypto assets during a discussion on Twitter Spaces with the US Army last year. Gensler stated that most cryptocurrencies do not comply with regulations and lack real use cases. Referring to the crypto industry as the "Wild West," Gensler noted that many people easily fall into the "FOMO" trap in this industry.
"Most of these 10 or 15,000 tokens will fail. That's because venture capital fails, new startups fail - but also because history tells us that there's not much room for micro-currencies, meaning, we have the US dollar and Europe has the euro and the like," said Gensler.
Analyst's and Crypto Player Insight
It's common to know that the SEC tends to make unsupportive policies when it comes to cryptocurrency. The Chairman of SEC Gary Gensler implied that they felt pressured to approve the Spot Bitcoin ETFs. It can be seen by how many times Spot Bitcoin ETFs have been delayed before it gets approval.
Hence, crypto communities speculate that the SEC tends to prolong the potential approval of Ethereum ETF. Senior Analyst Bloomberg Intelligence, Eric Balchunas said that he's 70% confident that a Spot Ethereum ETF will receive approval by May.
On the other hand, Co-founder of Volatility Shares, Stuart Barton confidence in the approval of a spot Ethereum ETF. He implies that the SEC will approve spot Ethereum ETFs, as they have accepted spot Bitcoin ETFs. He also believes that the commission may view Ethereum as non-security and is not inclined to regulate it in that way.