In the United States, we continue to wait for the arrival of Ethereum exchange traded funds (ETFs). On May 6, 2024, the Securities and Exchange Commission (SEC) announced that it has extended the review period for the Invesco Galaxy Ethereum ETF by 60 days. This means a decision will not be made until July 5, 2024.
The delay is in line with recent analysts' predictions that the review process will be lengthy. The SEC has carefully considered several Ethereum ETF proposals, including filings from Grayscale, Franklin Templeton, VanEck, and BlackRock. In February, the committee requested public comment on the Invesco Galaxy ETF, further extending its timeline.
The postponement dampened market enthusiasm for Ethereum ETFs. In late May, Bloomberg ETF analyst Eric Balciunas significantly lowered the probability of approval for such products from about 70% to 25%. This change reflects growing concerns about the SEC's stance on Ethereum ETFs.
The regulatory landscape surrounding Ethereum's classification remains ambiguous. This ambiguity has led to increased SEC scrutiny, as evidenced by the recent extension of the Franklin Templeton Ethereum ETF's expiration date to June 10, 2024. Analysts expect these proposals could be rejected in May due to unresolved classification issues.
Regulatory uncertainty hampers Ethereum ETF
The SEC’s cautious approach casts doubt on the prospects for a quick launch of Ethereum-based ETFs. Despite the approval of spot Bitcoin ETFs earlier this year, the regulatory landscape for crypto ETFs remains uncertain. This cautious stance reflects a widespread lack of clarity regarding the classification and regulation of Ether and other crypto assets.
Although the Invesco Galaxy ETF decision has now been postponed to July, investors are keeping a close eye on the May 23 application deadline for VanEck's Ether ETF. Updates on this front could provide further insight into the SEC's overall approach to Ethereum ETFs.
The extension of the review period highlights the complexities involved in regulating the evolving cryptocurrency market. The SEC’s final decisions on these ETF proposals could have a significant impact on investor access to Ethereum and influence the broader direction of crypto asset regulation in the United States.
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