Grayscale’s Ethereum ETF Application Delayed by U.S. SEC

The U.S. SEC has postponed its decision on Grayscale’s proposal to convert its trust into a spot Ethereum ETF. The SEC extended the deadline for a potential rule change that would allow U.S. national exchanges to list and trade spot Ethereum (ETH) ETFs from Grayscale until June 23.

Grayscale initially submitted a Form 19b-4 with the NYSE Arca in October, seeking SEC approval to transition its existing Ethereum Trust (ETHE) into a spot ETH ETF. This move follows Grayscale’s successful conversion of its GBTC product into a spot Bitcoin (BTC) ETF in January.

In response to the SEC’s decision, Grayscale filed Form S-3 to register under the Securities Act of 1933, further advancing its efforts for the ETHE offering.

The SEC also delayed a similar application from asset manager Franklin Templeton until June 11, along with filings from issuers BlackRock, Fidelity, and VanEck seeking spot Ethereum ETFs. Analysts speculate that the inclusion of a staking feature in some applications may be a point of concern for SEC Chairman Gary Gensler, who has emphasized that many crypto assets are securities.

Despite significant outflows from Grayscale’s fund, spot BTC ETFs have seen over $12 billion in cumulative net inflows. GBTC experienced $1.6 billion in outflows earlier this week, representing a 50% decrease in managed volume.

Analysts at Bloomberg estimate a 35% chance of spot Ethereum ETF approval by May, highlighting the ongoing regulatory scrutiny surrounding cryptocurrency investment products.

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