Ethereum ETF - The only date that matters

The SEC (Securities and Exchange Commission) has postponed its decision regarding the approval of BlackRock’s Ethereum ETF.

Ethereum ETF

This is the second postponement for BlackRock’s iShares Ethereum ETF. The first was in January, shortly after the approval of Bitcoin ETFs. The SEC can postpone its decision up to three times before having to make a final verdict.

The deadline will be May 23rd. It will concern VanEck’s Ethereum ETF application. Bloomberg’s ETF analyst James Seyffart believes that May 23rd is the “only date that matters”:

SEC just delayed @InvescoUS & @galaxyhq's #Ethereum ETF. 100% expected and more delays will continue to happen in coming months.

The only date that matters for spot #ethereum ETFs at this time is May 23rd. Which is @vaneck_us's final deadline date pic.twitter.com/gkVZL2QuPK

— James Seyffart (@JSeyff) February 6, 2024

To him, “all decisions before this date will be adjournments.” “Personally, I can’t imagine them rejecting VanEck’s Ethereum ETF and then approve those of the competitors.”

It is worth noting that the SEC is going to launch a public consultation to decide whether it should approve Ethereum ETFs or not. Concerns are particularly focused on the potential for fraud and manipulation associated with the Proof-of-Stake mechanism.

Another point to note is that the ETF applications are based on the premise that Ethereum is a “commodity”. Here is what can be read in the SEC’s statement published this Monday, March 4th:

“On November 21, 2023, Nasdaq submitted to the SEC an ETF application aiming to list shares of the iShares Ethereum Trust under the name Nasdaq Commodity-Based Trust Shares.”

However, SEC Chairman Gary Gensler has consistently refused to classify Ethereum as a “commodity”. Here are his remarks following the reluctant validation of Bitcoin ETFs:

“It is important to note that the Commission’s decision is limited to ETFs backed by a ‘commodity’, bitcoin, and not a ‘security’. It should in no way signal the Commission’s willingness to approve ETFs for crypto-assets [Ethereum] that fall under the securities laws.”

No ETH ETF until 2025?

Variant’s legal director for the crypto company, Jake Chervinsky, doubts an ETH ETF could be approved this year:

I am a lot less confident about ETH ETF approval this year than many of you are.

The SEC got a ton of political blowback for approving BTC ETFs, even though the court basically forced it to.

Now animal spirits are in control of the market, and an ETH ETF would only add to that.

— Jake Chervinsky (@jchervinsky) March 1, 2024

For him, the SEC will have to be forced again by a court decision. Indeed, Bitcoin ETFs probably wouldn’t have happened if the Columbia Court hadn’t given the green light for Grayscale’s Bitcoin Trust to be converted into an ETF.

Jake Chervinsky also added that it is reasonable to think that the question is not “if” Ethereum ETFs will become a reality, but “when”.

Ethereum has not been affected by the postponement of the SEC’s decision. It is trading around $3,700, which is 30% below its 2021 record high.

The ETH/BTC pair is still down 34% compared to 2021. On the other hand, Bitcoin is a hair’s breadth from its all-time high, bolstered by the tens of billions of dollars funneled through ETFs.