The U.S. Securities and Exchange Commission (SEC) has begun additional proceedings for three proposed cryptocurrency exchange-traded funds (ETFs), effectively delaying their approval, as announced in a notice published on December 18. This proceeding concerns Grayscale’s regulatory changes proposed by NYSE Arca. Nasdaq’s offering for the Ethereum Futures Trust ETF and Hashdex’s spot Ethereum ETF.
Initially, on November 15, the SEC extended the review period for these proposals, but now the new process has further delayed a decision on each ETF. According to the notice, interested parties must submit initial and rebuttal comments within 21 and 35 days, respectively, of publication of the notice in the Federal Register, indicating that a decision is at least 35 days away.
SEC asks about Ethereum features and more
In both filings, the SEC asked whether Ethereum’s unique features, including proof-of-stake consensus, raise concerns about manipulation and fraud not seen in Bitcoin futures ETFs. The agency asked more broadly about vulnerability to fraud and manipulation and the ability of each ETF offering to reduce these risks.
In connection with Grayscale’s application, the SEC specifically asked whether the proposed fund would have to be approved if multiple competing funds began trading, assuming each fund would offer equal exposure.
In the Hashdex proposal, the SEC asked several questions about the Ethereum spot market. These questions relate to issues such as liquidity, futures-based spot prices, correlation between spot and CME Ethereum futures markets, and whether the relevant regulated markets are significant.
Pando ETF
Finally, the SEC published a notice requesting comment on rule changes proposed by Cboe BZX with respect to Pando Asset AG’s spot Bitcoin ETF.
This announcement provides substantial background information similar to previous announcements regarding spot Bitcoin ETFs. However, unlike the two Ethereum ETF announcements described above, we are not seeking answers to specific questions.
Pando Asset AG applied for a spot Bitcoin ETF on November 29th. As such, the SEC’s filing is an early notification that will not delay the process yet. Instead, it states that the SEC must approve, disapprove, or initiate additional proceedings within 45 days of publication in the Federal Register, or within a longer period of 90 days. It does not provide an exact deadline.