SEC Delays Ruling on Grayscale, BlackRock Ethereum ETFs

The agency said that it needed more time to weigh the proposals by the two financial services firms.

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Reviewed by: Ron Day
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Edited by: James Rubin

The Securities and Exchange Commission has delayed ruling on spot Ethereum ETF applications by Grayscale Investments and BlackRock Inc., the agency said in regulatory filings on successive days.  

The agency said Thursday it would need more time to decide on Grayscale’s proposal to convert its Ethereum Trust product into an ETF. The filing followed a similar announcement by the regulator on Wednesday to extend its deliberations on a BlackRock Ethereum ETF product by 45 days. 

The Commission is instituting proceedings to allow for additional analysis,” the SEC said in its Grayscale filing, noting that its decision was consistent with securities law "‘designed to prevent fraudulent and manipulative acts and practices'" and "'to protect investors and the public interest.’”  

Spot Ethereum ETF products are based primarily on the price of ether, the world’s second largest cryptocurrency by market capitalization behind bitcoin. Grayscale and BlackRock filed their Ethereum applications last fall amid rising investor optimism that the SEC was looking more favorably at spot crypto products. On Jan. 10, the regulator approved 11 spot bitcoin ETFs.  

BlackRock, Grayscale Ethereum ETFs

As the SEC neared a decision on those applications, it met frequently with issuers and exchanges on which the products would be traded to address concerns about investor safety. How far the regulator’s thinking has progressed at this point was unclear from the filings, although it seemed to encourage public input in its Grayscale filing. 

“What are commenters’ views on whether the proposed Trust and Shares would be susceptible to manipulation?,” the SEC said. “What are commenters’ views generally on whether the Exchange’s proposal is designed to prevent fraudulent and manipulative acts and practices? What are commenters’ views generally with respect to the liquidity and transparency of the ETH markets and the ETH markets’ susceptibility to manipulation?  

Ethereum is a smart contracts blockchain platform used by software developers to build their projects, while bitcoin is primarily used as currency.  

Ether and bitcoin were both trading flat over the past 24 hours, with ETH perched at about $2,220 and BTC at around $39,900. Major cryptocurrencies have struggled since the spot bitcoin approvals. 

Lou Carlozo is editor and publisher of Talking Biz News, a business journalism website. He is also the host and creator of the Bankadelic podcast, and a Pulitzer Prize finalist and Polk Award winner as a team reporter. Carlozo is also a former Chicago Tribune columnist, editor and staff writer.