SEC Punts Fidelty Spot Ethereum ETF Decision to March

By Stephen Graves

The U.S. Securities and Exchange Commission (SEC) has pushed back its deadline for a decision on Fidelity's proposed spot Ethereum ETF to March 5.

According to a Thursday filing, the SEC "finds it appropriate to designate a longer period within which to take action on the proposed rule change," in order to ensure that it has "sufficient time to consider the proposed rule change and the issues raised therein."

Bloomberg Intelligence ETF analyst James Seyffart said that the delay was "completely expected," adding that, "Dates that really matter are late May in my view."

Fidelity applied for its spot Ethereum ETF in November 2023, joining the likes of BlackRock, Ark Invest/21shares and VanEck.

Seyffart's colleague Eric Balchunas expressed confidence that an Ethereum ETF would be approved in 2024 earlier this month, asserting that there is a 70% chance of an approval by May. Speaking on Rug Radio's FOMO Hour, Balchunas said that the SEC's prior approval of Ethereum futures ETFs has backed the regulator into a corner, since its approval of Bitcoin futures ETFs resulted in a court order to review Grayscale's spot Bitcoin ETF application.

The SEC last week approved multiple spot Bitcoin ETF applications, with chair Gary Gensler conceding that circumstances had "changed" following the court order.

“Ipso facto, you have to approve an Ether spot [ETF], or you’re going to get sued again for the same exact reason,” Balchunas said during a Rug Radio appearance late last week.

In his statement following the approval of spot Bitcoin ETFs, SEC chair Gensler took pains to state that "today’s Commission action is cabined to ETPs holding one non-security commodity," Bitcoin, and that "It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities." Gensler added that, "Nor does the approval signal anything about the Commission’s views as to the status of other crypto assets under the federal securities laws."

During his term as SEC chair, Gensler has repeatedly refused to clarify whether the regulator considers Ethereum a security or a commodity.

Prior to taking his position at the regulator, while teaching a course on blockchain at MIT, Gensler stated that Ethereum is "not a security" in the eyes of the SEC, noting that it considered the cryptocurrency "sufficiently decentralized" that it doesn't qualify. Gensler was seemingly mirroring the opinion of the SEC's former Director of Corporate Finance William Hinman in his much-cited "sufficiently decentralized" speech of June 2018.

Gensler's fellow regulator, chair of the Commodity Futures Trading Commission (CFTC) Rostin Behnam, has expressed the view that Ethereum should be considered a commodity.

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