The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Fidelity’s proposed spot Ethereum exchange-traded fund (ETF) to March 5.
The delay gives regulators more time to consider issues raised by ETFs when deciding whether to approve them. This expected delay pushes the timeline for a final decision back to the end of May, when the SEC faces a deadline to approve or reject a competing spot Ethereum ETF proposal submitted by VanEck.
TLDR
- The SEC postponed its decision on Fidelity’s proposed spot Ethereum ETF until March 5 to consider the issues raised.
- The delay was expected, with a decision expected to be made in late May when the SEC must decide on VanEck’s Ethereum ETF proposal.
- Fidelity and BlackRock have joined the spot Ethereum ETF race after their futures-based ETF was approved.
- Opinions are divided on whether the SEC will ultimately approve a spot Ethereum ETF.
- Meanwhile, several companies have submitted proposals for leveraged Bitcoin ETFs, which could soon outnumber regular Bitcoin ETFs.
If Fidelity’s proposed Ethereum fund is approved, it will be able to invest directly in the cryptocurrency rather than through futures contracts. It aims to leverage a court ruling from last year that found the SEC failed to provide a clear rationale for rejecting spot cryptocurrency ETFs while allowing futures-based products. However, the delay indicates regulators remain cautious even after approving several spot Bitcoin ETFs last week.
fidelity #Ethereum The ETF was just postponed. Totally expected. The really important date, in my opinion, is the end of May. https://t.co/8mvhcPRaS7
— James Seyff (@JSeyff) January 18, 2024
With it still unclear whether a spot Ethereum ETF will be approved, financial giants Fidelity and BlackRock have joined the race, submitting proposals for late 2022. This comes shortly after the SEC Greenlight Ether Futures ETF began trading. Supporters see the approval of these derivatives as a positive sign that regulators may not classify ether as a security that needs to be strictly regulated.
Despite the recent victories of spot Bitcoin funds, opinions are divided as to whether a spot Ethereum ETF will ultimately gain approval. Some analysts expect a 70% chance of approval by the May deadline, while others point out that the SEC still appears hostile to cryptocurrencies and could set Ethereum apart from Bitcoin. In particular, regulators’ views on whether Ethereum should be classified as a security or a commodity will be important.
As the debate over a potential Ethereum ETF continues, proposals for leveraged and inverse Bitcoin funds are rapidly accumulating. Direxion filed for five Bitcoin ETFs in mid-January, joining REX Shares and ProShares, which previously filed for 11 leveraged funds in early 2023. If approved, the number of leveraged Bitcoin ETFs could soon surpass regular ETFs. The flood of these filings shows pent-up appetite for cryptocurrency investment vehicles after years of SEC rejection.
T-Rex has filed six leveraged and inverse Bitcoin ETFs.
T-Rex 1.5X Reverse Spot Bitcoin Daily Target ETF
T-Rex 1.5X Long Spot Bitcoin Daily Target ETF
T-Rex 1.75X Reverse Spot Bitcoin Daily Target ETF
T-Rex 1.75X Long Spot Bitcoin Daily Target ETF
T-Rex 2X Inverse Spot Bitcoin Daily… pic.twitter.com/eLFTiS1Gq9— Henry Jim’s ETF article (@ETFhearsay) January 3, 2024
While it may seem more likely that a leveraged cryptocurrency ETF will be approved given the recent spot Bitcoin decision, spot Ethereum funds face a more difficult road with more complex implications when it comes to cryptocurrency classification. The coming months will be pivotal in determining regulatory positions. For now, uncertainty persists even as hard-hit institutions are lining up to capitalize on surging investor demand once the hurdles for the Ethereum ETF are removed.