SEC Initiates Proceedings on Grayscale’s Ethereum ETF Application
The United States Securities and Exchange Commission (SEC) has taken a significant step in the cryptocurrency market by initiating proceedings on Grayscale Investments’ application for a spot Ethereum ETF. The SEC has also extended the deadline for making a decision on the application.
Review Period for Grayscale’s Ethereum ETF
Grayscale filed its application with the SEC on October 10, 2023, seeking approval to list and trade shares of the Grayscale Ether Trust on the New York Stock Exchange (NYSE) Arca. The proposed rule change was published for public comment in the Federal Register on October 27.
In response, the SEC has provided an extended period to review, approve, disapprove, or institute proceedings on the proposed rule change. This is similar to the steps taken before approving Bitcoin Spot Exchange Traded Funds earlier this year.
Thorough Analysis by the SEC
The SEC has stated that it will thoroughly analyze whether to approve or disapprove the proposed rule change. The decision to institute proceedings does not indicate any preconceived conclusions but reflects the need for further examination of legal and policy issues associated with the Ethereum ETF application.
The SEC highlights the need to consider the consistency of the proposed rule change with Section 6(b)(5) of the Securities Exchange Act of 1934, which aims to prevent fraudulent and manipulative acts, protect investors, and serve the public interest.
SEC Requests Feedback
The Commission has posed several questions for commenters to address. These include evaluating whether it is appropriate to list and trade shares under NYSE Arca Rule 8.201-E, considering the nature of the underlying assets held by the Trust. The SEC is also seeking additional input on the Exchange’s arguments for listing and trading spot Bitcoin exchange-traded products (ETPs).
Interested individuals and organizations can submit written data, views, and arguments regarding the proposed rule change’s consistency with the Act and its regulations. The SEC will consider requests for oral presentations as well.
Uncertainty Surrounding Ethereum ETF Approval
Given the recent approval of 11 Bitcoin spot exchange-traded funds, the future actions of the SEC regarding Ethereum ETF applications remain uncertain. It is also important to consider how the SEC’s classification of Ethereum as a “security” might impact the decision-making process for the 12 Ethereum ETF applications. The SEC currently views Bitcoin as the only commodity within the cryptocurrency market.
Hot Take: Ethereum Price Correction
In line with Bitcoin’s trajectory, Ethereum has experienced a significant correction, with a decline of over 14% in the last 14 days and 11% in the past seven days. As a result, its current price stands at $2,217.
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