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SEC Delays Decision on Franklin Templeton’s Spot Ethereum ETF Application

The SEC in the United States has revealed a postponement in its verdict on the proposed Ethereum ETF by Franklin Templeton, stretching the deadline to June 11, 2024. This disclosure surfaced through a filing released today, casting a shadow of uncertainty over the fate of this financial offering, at least for now.

Originally submitted in February, the ETF aims to mirror the value of ether and plans to enlist Coinbase Custody Trust Company and the Bank of New York Mellon as its custodians.

Franklin Templeton’s Spot Ethereum ETF Decision Delayed: SEC Extends Deadline to June 2024

The SEC’s decision to prolong the review period arises from the necessity for added time to meticulously assess the proposed rule adjustments and the intricate matters surrounding Ethereum’s classification and its appropriateness for a spot ETF.

According to the SEC, “The Commission deems it necessary to allocate a more extensive duration to deliberate on the proposed rule change so that it can adequately delve into the proposed rule change and the concerns raised therein.”

This cautious stance echoes a comparable postponement for Grayscale’s Ethereum Trust proposal, which aims to transition into a spot ether ETF subsequent to the successful transition of its Bitcoin trust earlier this year.

This maneuver occurs amid a surge in requests for spot cryptocurrency ETFs, with industry titans such as Fidelity and BlackRock entering the fray.

Initially, analysts like Bloomberg’s James Seyffart had anticipated a decision in May, stating, “Many analysts have speculated that the SEC will reach a final decision on whether to approve or deny a spot Ether ETF for listing and trading on U.S. exchanges in May, during deadlines for applications from several asset managers.”

However, recent delays by the SEC have dampened these expectations. Seyffart himself expressed doubt, suggesting that the current round of Ether ETF applications might ultimately face rejection.

Bloomberg analyst Eric Balchunas adjusted his probability of approval from 70% to a more cautious 35%, underscoring the escalating uncertainty.

Despite the regulatory challenges and diminished expectations, the market’s demand for cryptocurrency investment instruments remains robust.

The SEC’s previous approval of spot Bitcoin ETFs in January 2024 resulted in a significant influx of funds, with these ETFs garnering a total net inflow of $12.39 billion as of the time of writing.

Approval Uncertain for Spot ETH ETFs as SEC Takes Cautious Approach

Amidst the intricate landscape surrounding spot Ethereum ETFs, the SEC has recently launched a phase of public feedback regarding their possible approval. Specifically, the commission is seeking input on proposals from Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum.

This development comes after the SEC’s earlier green light on several spot Bitcoin ETFs in January 2024. However, SEC Chair Gary Gensler has advised against interpreting this as an endorsement of crypto assets or their regulatory status.

Despite initial optimism, the chances of approval for a spot Ethereum ETF seem to have significantly decreased. Industry leaders like VanEck CEO Jan van Eck have expressed doubts about the approval prospects, hinting that their firm’s application might be rejected.

CoinShares CEO Jean-Marie Mognetti echoed similar concerns, anticipating a prolonged period of SEC inactivity regarding pending applications.

Adding to the urgency, Democratic Senators Laphonza Butler and Jack Reed have urged SEC Chair Gensler to proceed cautiously in approving crypto-based ETFs, citing potential risks to investors and worries about insufficient regulatory protections.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

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