SEC Delays Decision on Ethereum ETF Options to November
The United States’ Securities and Exchange Commission has delayed a decision on options trading approval for spot Ethereum exchange-traded funds. The regulator initially had until the end of September to make its decision but extended its review period until November 10 and 11, 2024.
More Time Needed by the SEC
The agency, in two separate filings, explained that it needs “sufficient time to consider the proposed rule change” which aims to allow Nasdaq ISE LLC and NYSE American LLC to list options trading for spot Ethereum ETFs. This move places the applications of several market participants such as BlackRock, Bitwise, and Grayscale on hold, which are still awaiting the commission’s nod for their different Ethereum-based funds.
Background of the Filings
In August 2024, BlackRock filed to amend the rules and allow options trading of the iShares Ethereum Trust, ETHA. Similar filings by Bitwise and Grayscale soon followed through NYSE American LLC. For now, the funds are caught in the tail of an extended waiting period as the SEC takes an extra cautious approach under Section 19(b)(2) of the Securities Exchange Act.
SEC Taking a Conservative Approach; Recent Approvals
In line with the general position of the SEC on crypto ETPs, it only last month approved options on BlackRock’s iShares Bitcoin Trust following an eight-month review process for the options listing, during which Nasdaq made intensive changes.
Ethereum ETFs Suffer Outflows As Regulatory Uncertainty Remain
It’s a terrible time to introduce an extension for the spot Ethereum ETFs. The nine funds have reported seven consecutive weeks of outflows, a combined total of over $620 million. On the other hand, spot Bitcoin ETFs have seen inflows above $17 billion since their creation.
Impact on Investors and Market Sentiment
Impact on Investors and Market Sentiment
That would be a monumental decision on the part of the SEC, with very strong implications for investors and for the greater crypto market. The holdup on approval for trading Ethereum ETF options speaks volumes about the intent of the regulator, which seems to fear manipulation in these markets due to the pre-existing regulatory environment.
Response of BlackRock to Investors’ Concerns
In a related development, BlackRock recently updated its Bitcoin ETF filing to demand from the custodian, Coinbase, that it process ETF withdrawals within 12 hours. It is presumed to ease the growing unease among investors regarding the disappearance of their assets in the thin air and ought to be reassuring to the investors that proper management practices are in place.
The crypto world now awaits what looks to be the final decision by the SEC in November, which will likely influence the dynamics of the market and investor confidence in Ethereum-based ETPs.
