SEC Delays Decision on Ethereum ETF Approval
Commentary by Steven Lofchie
The SEC delayed a decision on a proposed rule change by Nasdaq that would allow the listing of exchange-traded funds based on Ethereum.
According to the SEC, the agency found it "appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein." The delay comes shortly before the third deadline set by the SEC for these applications.
The SEC approved the listing and trading of spot Bitcoin ETF shares "on an accelerated basis" in January. (See related coverage.) This approval followed a decision by the D.C. Court of Appeals which vacated the SEC's disapproval of NYSE Arca's proposal to allow the listing and trading of shares of Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust. That Court found the SEC's refusal to allow such listing "arbitrary and capricious."
The SEC's decision on the proposed rule change is now due on May 30, 2024
Commentary
Public comments on the delay in allowing the listing of an Ethereum-based ETF to go forward appear to indicate that the SEC cannot decide whether the coin is a "security."
Ethereum is the second largest cryptocurrency by market value (Bitcoin is largest); it trades in very big volumes (as reported by Forbes on March 21 over $23 billion in a day) and has done so for a long time. By now, the SEC should have formulated a view as to whether Ethereum is a security. If the SEC cannot even answer that question, how is anyone in the market to know which cryptocurrencies are securities? If the question cannot be answered by the SEC, then the bringing of enforcement actions by the SEC based on claims of a securities law violation seems inappropriate; it is the epitome of regulation by enforcement.
Related Articles
-
The SEC approved the listing and trading of spot bitcoin exchange-traded product shares "on an accelerated basis."
-
The D.C. Court of Appeals vacated the SEC's disapproval of NYSE Arca's proposal to allow the listing and trading of shares of Bitwise Bitcoin ETP Trust and Grayscale Bitcoin Trust, both of which held bitcoin.