Multiple review decisions have been postponed again, will the Ethereum spot ETF be "stillborn"?

Author: Nian Qing, ChainCatcher

On March 19, local time, the U.S. Securities and Exchange Commission (SEC) issued two notification documents that once again postponed the decision-making time of the two Ethereum spot ETFs, respectively extending the decision-making time for the Hashdex Nasdaq ETH ETF application to On May 30, 2024, the decision on the ARK 21Shares Ethereum ETF application will be postponed to May 24, 2024.

In the notice, the SEC stated: “The Commission believes it is appropriate to specify a longer period for issuing an order approving or disapproving the proposed rule changes so that the Commission has sufficient time to consider the proposed rule changes and the issues raised therein.”

As previously reported, on March 4, the SEC postponed its decision on BlackRock’s application for iShares ETH Trust and Fidelity’s application for its Ethereum ETF.

Although this delay was expected, it still had a certain impact on market sentiment and prices. According to RootData market data, Ethereum fell below $3,200, with an intraday drop of more than 10%.

According to Bloomberg ETF analyst James Seyffart’s social media, at least three more Ethereum ETFs will be postponed today and tomorrow. VanEck, Ark/21Shares, Hashdex and Grayscale will all be delayed in the next 12 days or so. He has previously said that the postponement of all ETF review decisions may last until May 23.

In addition, he also said: “In recent months, my cautiously optimistic attitude towards ETH ETF has changed. We now believe that these applications will eventually be rejected in the May 23rd round. The US SEC has not yet issued any regulations on Ethereum. Communicate with the issuer on specific matters. It is completely opposite to the situation when applying for the Bitcoin spot ETF last fall.”

Over the past few weeks, market optimism about the approval of the Ethereum spot ETF application has continued to decline. Bloomberg ETF analyst Eric Balchunas also recently lowered the likelihood of an Ethereum spot ETF being approved in May to 30% from about 70%. Data shows that Ethereum’s one-month bullish-bearish skew has turned negative, suggesting relative strength in put options. Previously, Ethereum’s 60-day indicator was also bearish, while the 90-day and 180-day indicators remained positive. QCP Capital explained in its latest market insight article that investor interest in recent Ethereum put options may stem from the reduced likelihood that the U.S. SEC will approve an Ethereum spot ETF in May.

It is understood that the Ethereum spot ETF has four review periods (45 days, 45 days, 90 days and 60 days). Once an institution submits a new ETF application, the SEC will register the application in the Federal Register. , starting from the day of registration, the 240-day cycle begins. When the deadline for each stage comes, the SEC must respond: pass, deny, or delay review. If there is no resolution on the first date, it will be postponed to the second, until the deadline is reached and the SEC must make a final resolution. In other words, May 23, the deadline for the Ethereum spot ETF that was the earliest VanEck applied for, will be a critical date, and whether it is passed or not will also directly affect the resolution of other applications.

Currently, seven entities are applying for Ethereum ETFs, namely: BlackRock, Fidelity, Invesco&Galaxy, Grayscale, VanEck, 21Shares &Ark and Hashdex. The SEC approval period for each fund is as shown in the following table:

Although other sources such as Matt Hougan, global head of research at Bitwise, have previously predicted that the probability of the Ethereum spot ETF being approved in May is close to 50% or even higher, but compared with the already listed Bitcoin spot ETF, the Ethereum spot ETF There are still certain "risks". In public documents, the SEC has said: “There are unique concerns about whether certain characteristics of Ethereum and its ecosystem, including its proof-of-stake consensus mechanism and the concentration of control or influence of a few individuals or entities, make Ethereum susceptible to fraud and manipulation. point?"

As BloFin recently released "Should we prepare for Ethereum spot ETF rejection?" "As mentioned in "Compared with spot Bitcoin ETFs, the negative impact of the PoS mechanism, price manipulation risks and securitization risks have significantly reduced the probability of approval of spot ETH ETFs.

The continued rise in the crypto market some time ago may have raised our expectations for this result. This decline can somewhat allow us to return to calmness, and at least be prepared for the rejection of the Ethereum spot ETF.