February 8, 2024

SEC Delays Decision on Ether ETF, Continuing Trend of Deferred Proposals

The U.S. Securities and Exchange Commission (SEC) has once again postponed its decision regarding a significant exchange-traded fund (ETF) tied to the cryptocurrency underpinning Ethereum.

According to a recent SEC filing, the regulatory body has deferred its ruling on a jointly proposed ETF from financial powerhouse Invesco and crypto firm Galaxy Digital.

The proposal, submitted last September, aims to offer investors exposure to ether (ETH), the second-largest digital asset, without necessitating direct purchase and storage.

This delay follows the SEC's recent approval of 10 bitcoin ETFs, which have garnered substantial investor interest since becoming actively traded.

Speculation regarding the approval of an ether ETF has intensified, with analysts, including those at British bank Standard Chartered, suggesting a potential arrival by May. The argument hinges on the SEC's prior stance, notably refraining from labeling ETH as a security while cracking down on unregulated crypto securities.

The SEC's tendency to defer decisions is not new, evidenced by its postponement of several spot ETH ETF applications this year, involving prominent players such as BlackRock and Fidelity.

ARK 21Shares has also made adjustments to its ether ETF application, introducing a cash-creation model alongside provisions for ETH staking. The move aligns with the recently approved spot bitcoin ETF’s framework.

ETFs offer traditional investors a gateway into the complex realm of cryptocurrencies, with the management company handling storage while investors purchase shares tracking asset prices.

The recent green light for bitcoin ETFs marks a significant shift after the SEC's decade-long resistance to such products, indicating a potential opening for similar offerings in the crypto space.

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