SEC Asks Nasdaq and Cboe to Revise Ethereum ETF Proposals

SEC Asks Nasdaq and Cboe to Revise Ethereum ETF Proposals

EconomySEC

By Jakub Lazurek

22 May 2024 (27 days ago)

2 min read

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The SEC has asked Nasdaq and Cboe to revise their Ethereum ETF proposals, a key step in the approval process for these financial products.

The US Securities and Exchange Commission (SEC) has asked Nasdaq and Cboe to revise their spot Ethereum exchange-traded fund (ETF) proposals. This request is a crucial step in the regulatory review process, showing the SEC’s commitment to ensuring these financial products meet regulatory standards.

Nine firms, including Grayscale, BlackRock, Vaneck, 21Shares, Ark Invest, Hashdex, Invesco, Galaxy, Fidelity, Franklin Templeton, and Bitwise, are waiting for the SEC's decision on their ETF applications. Following this news, market speculation has increased, with Bloomberg analysts, including James Seyffart, raising the approval odds from 25% to 75%. Standard Chartered, which manages over $800 billion in assets, predicts an 80-90% chance of approval.

Seyffart noted that Grayscale has recently updated its 19b-4 form for its Ethereum Mini Trust, showing increased activity around ETF proposals. He clarified that this is an initial filing and does not expect it to be included in the first wave of approvals.

Fidelity Investments has made significant changes to its spot Ethereum ETF proposal, removing the staking feature in its latest SEC filing. This adjustment reflects a strategic response to regulatory uncertainties.

Alex Thorn, head of research at Galaxy Digital, speculated that the SEC might distinguish between Ethereum and staked Ethereum in their regulations. “If the speculation about a 180 from SEC on the Ethereum ETFs is true, I would guess they try to thread a needle between ‘ETH’ not being a security and ‘staked ETH’ as being a security. That would allow SEC to approve Ethereum ETFs while maintaining their previously stated opinions,” said Thorn.

The SEC’s detailed review process and the strategic adjustments by firms like Fidelity indicate a cautious approach to launching these financial products. The SEC aims to ensure that all proposed ETFs comply with regulatory standards, creating a robust framework for these new financial instruments.

In summary, the SEC's request for revisions to the spot Ethereum ETF proposals from Nasdaq and Cboe is a key moment in the regulatory process. With nine major firms awaiting approval and increased market speculation, the SEC's next steps will be closely watched. The adjustments by firms like Fidelity show efforts to meet regulatory expectations and successfully introduce these ETFs to the market.

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