SEC Delays VanEck’s Spot Ether ETF Application Deadline

Jimmy Aki
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The United States Securities and Exchange Commission (SEC) has pushed the deadline for applying VanEck’s spot Ether exchange-traded fund (ETF) to May 23. This is contained in the notice of the commission dated March 20.

The delay means that the proposal will remain open for public comment.

VanEck Ether ETF Approval Optimism Wane Off

The VanEck Ether ETF is necessary for a comprehensive review by the SEC, as it originated from the Cboe BZX Exchange’s request to list and trade shares

As detailed in the 45-page notice, the SEC stressed the need to have enough time to thoroughly assess the proposed rule change. This is to either approve or deny the investment vehicle after careful consideration.

Spot Ether ETF
SEC’s notice of approval extension on VanEck spot Ether ETF application

This postponement came shortly after the Hashdex Nasdaq Ethereum ETF and the Invesco Galaxy Ethereum ETF had similar delays. It indicates a trend of caution by the regulatory authority in approving crypto-based ETFs.

The speculation surrounding the decision on a spot Ethereum ETF has been a topic of discourse.

It should be noted that major firms like Fidelity and BlackRock have submitted applications for such products, which have also faced delays.

However, recent optimism about crypto ETFs has diminished, with Bloomberg ETF analyst Eric Balchunas revising his prediction of the possibility of approval by May 23 to become uncertain.

Furthermore, local news reports suggested that the SEC considers the classification a security. Therefore, the financial watchdog has issued subpoenas to three companies to investigate the Ethereum Foundation, the entity behind the Ethereum blockchain network.

Before the SEC’s investigation became public, the Ethereum Foundation’s GitHub indicated that it had received a voluntary inquiry from a state authority on February 26, 2024, which included a confidentiality requirement.

Spot Ether ETF
Ethereum Foundation’s Github website suggested an initial probe

While the agency approved 11 Bitcoin ETFs earlier this year, it appears that Ethereum ETFs may encounter regulatory obstacles.

 

Deep Dive into SEC’s Regulatory Approach to Spot Ether and BTC ETFs

Before the extensions of spot Ether ETF applications and the probe of the Ethereum Foundation, the SEC had previously approved investment vehicles tied to Ether futures in October 2023.

The approval indicated a leaning towards classifying Ether as a commodity rather than a security.

This latest delay in VanEck’s application allows for public comment. It has elicited concerns in the crypto communities about why the SEC is shifting towards classifying Ethereum as a security.

Meanwhile, Bitcoin has seen a different regulatory treatment from the SEC.

The financial watchdog approved spot Bitcoin ETFs application on January 10, indicating a more favorable view of Bitcoin as an asset class.

Spot Bitcoin ETF holds physical Bitcoin, which allows investors to gain exposure to Bitcoin price without having to buy, store, and secure the cryptocurrency themselves directly.

The ETF’s value is directly tied to the price of Bitcoin in the spot market, where assets are bought and sold.

Similarly, Spot Ether ETF holds physical Ether and tracks its price in the spot market, allowing investors to invest in Ether without owning and storing the cryptocurrency.

However, there has been no official statement or guideline to explain the SEC’s regulatory treatment of spot Ether or how its approach differs from spot Bitcoin.

Government officials also seem to hold a negative stance on cryptocurrency, alongside all proposed spot ETFs attached to them.

On March 11, United States Democratic Senators Jack Reed and Laphonza Butler wrote to SEC Chair Gary Gensler urging him to reject Ether ETF applications. This was due to perceived risks for retail investors and difficulties in reviewing them.

Nonetheless, the SEC’s delay in approving spot Ether ETFs and the lack of clarity in its regulatory approach have led to confusion and frustration within the crypto community, as approval looks unlikely.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.