SEC Postpones Decision on Invesco and Galaxy Digital's Ethereum ETF Proposal

By: Isha Das

The U.S. Securities and Exchange Commission (SEC) has postponed its decision regarding Invesco and Galaxy’s spot Ethereum ETF, originally set for Feb. 6. The rule change proposal in question, submitted by Cboe BZX, seeks to allow listing and trading shares of the fund. This proposed change was open for public comment since Nov. 8, 2023, and its approval period was further extended on Dec. 13, 2023.

With this extension, the SEC aims to institute proceedings regarding approval or disapproval, specifically seeking commentary on fraud prevention, market manipulation, and investor protection measures. Similar issues were also pivotal in the approval of Bitcoin ETFs in January. The exact deadlines for submission and rebuttal comments haven't been specified by the SEC.

This extension, however, does not influence the overall approval timelines for Ethereum ETFs. It's speculated that the SEC will likely make decisions on multiple proposals simultaneously, including those with deadlines beyond the final deadline of VanEck's proposal on May 23rd. Noteworthy, the SEC has also recently postponed decision-making for other Ethereum ETFs submitted by Fidelity, BlackRock and Grayscale.

Despite the delay, a Polymarket prediction market conveys a 43% chance of approval by May, while Bloomberg ETF analyst James Seyffart and a member of JP Morgan suggest a likeliness of 60% and 50% respectively. Contrarily, a research group from TD Cowen believes that an Ethereum ETF will not receive approval before 2025 or 2026.