SEC delays lower expectations of Ethereum ETF approval by May despite staking additions SEC delays lower expectations of Ethereum ETF approval by May despite staking additions
The SEC has delayed Ethereum ETF applications again, lowering the expectations of a May approval even further.
2 min read
Updated: Mar. 20, 2024 at 2:25 am UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The US SEC has delayed the approval process for several highly anticipated Ethereum exchange-traded funds (ETFs), recent regulatory filings show.
The delays affect proposals from investment firms, including VanEck, Ark Invest, Hashdex, and Grayscale — which has added a staking component to its ETH ETF application along with Fidelity — sparking discussions about the future of crypto ETFs in the US.
Lower odds of approval
Bloomberg ETF analyst James Seyffart, who has been closely monitoring the developments, expressed a shift from his previously cautiously optimistic outlook regarding the approval of Ethereum ETFs.
He noted that the SEC’s lack of engagement on Ethereum-specific issues contrasts sharply with their approach to Bitcoin ETFs in the previous fall, dampening hopes for a positive outcome by the crucial May 23 deadline.
Similarly, Eric Balchunas recently pointed out that the absence of bullish signs and sources that were present before the Bitcoin ETF approvals significantly reduces the chances of a favorable decision for Ethereum ETFs, estimating the odds at 35%.
The conversation extended beyond the ETF delays, touching upon the broader regulatory environment for cryptocurrencies. Some suggested the SEC might insist on a court order before approving Ethereum ETFs, citing potential differences between Ethereum and Bitcoin in terms of their designation.
However, Seyffart disagreed with the notion that Ethereum could be classified as a security, a designation that could fundamentally impact its regulatory treatment.
The discussion also ventured into the realm of potential outcomes and strategies. Seyffart speculated about the future of Grayscale’s Ethereum futures product and its implications for potential legal challenges against the SEC’s decisions.
Staking in ETFs
Meanwhile, both Fidelity and Grayscale have added amendments to their Ethereum ETF applications to include a staking component.
Staking, a fundamental aspect of Ethereum’s proof-of-stake (PoS) model, involves the locking up of digital assets to support the network’s security and functionality, offering participants rewards in the form of additional crypto.
Grayscale’s proposal, like Fidelity’s, allows the ETF to allocate part of its holdings to staking through selected providers, potentially including affiliates. The move is designed to explore the income generation possibilities within a regulated financial framework, with the ETF expected to receive ether tokens as network rewards, which could be considered income for the fund.
However, this addition arrives amid increased scrutiny from US lawmakers, who have recently urged the SEC to halt the approval of new crypto-related ETFs due to concerns over investor risks.
As the May 23 deadline approaches, the crypto community remains on edge, awaiting further developments.
Ethereum Market Data
At the time of press 2:25 am UTC on Mar. 20, 2024, Ethereum is ranked #2 by market cap and the price is down 6.6% over the past 24 hours. Ethereum has a market capitalization of $384.94 billion with a 24-hour trading volume of $33.96 billion. Learn more about Ethereum ›
Crypto Market Summary
At the time of press 2:25 am UTC on Mar. 20, 2024, the total crypto market is valued at at $2.36 trillion with a 24-hour volume of $184.43 billion. Bitcoin dominance is currently at 52.29%. Learn more about the crypto market ›
Mentioned in this article
Ethereum 
Bitcoin 
VanEck 
Fidelity Investments 
Grayscale Investments 
Ark Invest 
James Seyffart 
Eric Balchunas Author 
Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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In this article
Ethereum is a decentralized, open-source blockchain platform that enables the creation of smart contracts and decentralized applications (DApps).
Bitcoin
$97,274.97
Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
VanEck
VanEck is a global investment manager with offices around the world, including New York, Australia, China, Germany, Netherlands and Switzerland.
Fidelity Investments
Fidelity Investments Inc., commonly referred to as Fidelity, is a multinational financial services corporation based in Boston, Massachusetts.
Grayscale Investments
Established in 2013 by Digital Currency Group, Grayscale Investments is a trusted authority on digital currency investing and cryptocurrency asset management.
Ark Invest
ARK Investment Management LLC (ARK Invest) holds a precision lens on thematic investing.
James Seyffart is a well-regarded analyst at Bloomberg Intelligence, specializing in Exchange-Traded Funds (ETFs) and the broader fund industry.
Eric Balchunas is an American author, ETF analyst, and Senior ETF Analyst at Bloomberg Intelligence.