The SEC delays BlackRock and Fidelity's Ethereum ETF approval decision

The United States Securities and Exchange Commission (SEC) has postponed a decision on the approval of spot Ethereum exchange-traded funds (ETFs) proposed by BlackRock and Fidelity, two of the world's largest asset managers. On March 4, the SEC said that it was seeking public opinions on the petitions, which were originally submitted in December 2023.

Several corporations, including BlackRock and Fidelity, have applied for spot Ethereum ETFs, which would follow the price of the second-largest cryptocurrency by market value. Unlike Bitcoin ETFs, which were authorized by the SEC in January 2024, Ethereum ETFs would not be based on futures contracts, but rather on the underlying asset.

The SEC has the right to postpone a decision on the applications up to three times, each for 45 days, before issuing a final judgment. The agency has already granted its first extension to BlackRock and Fidelity, delaying the planned deadlines from January to March. BlackRock's revised deadline is May 9, while Fidelity's is May 16.

The SEC has also requested public comments on the applications, which address several issues related to the liquidity, transparency, and manipulation of the Ethereum market, as well as the impact of the transition from proof-of-work to proof-of-stake consensus mechanisms, which is expected later this year.

The SEC's decision on Ethereum ETFs is being delayed while the cryptocurrency market continues to surge, with new highs expected in 2024. Ethereum, in particular, has outperformed Bitcoin, reaching a peak of more than $4,000 in February. The demand for Ethereum-based goods and services, such as decentralized finance (DeFi) and non-fungible tokens (NFTs), has also increased, driving more investors and developers to the platform.

Some analysts and experts feel that the introduction of Ethereum ETFs would be a significant stimulus for the cryptocurrency's growth, providing institutional and ordinary investors with more exposure and accessibility. Others are doubtful, claiming that given the market's complexity and volatility, the SEC is unlikely to approve spot Ethereum ETFs anytime soon.

One important date to watch for Ethereum ETFs is May 23, which is the closing deadline for another application filed by VanEck, a renowned distributor of Bitcoin ETFs. VanEck was the first to file a spot Ethereum ETF proposal to the SEC in December 2023, and many companies have since followed, including WisdomTree, Valkyrie, and Franklin Templeton.

It is unclear if the SEC will accept or disapprove any of the Ethereum ETF filings, but the conclusion might have far-reaching repercussions for the cryptocurrency industry's future. For the time being, investors and enthusiasts must only await the regulator's decision.