SEC Delays Decision on Franklin Templeton’s Spot Ethereum ETF Application
The U.S. Securities and Exchange Commission (SEC) has announced that it will be extending the deadline for its decision on Franklin Templeton’s proposed spot Ethereum ETF. The decision, which was initially expected to be made in May, has now been pushed back to June 11, 2024. This delay has created uncertainty regarding the future of spot ETH ETFs.
The proposed ETF aims to track the price of ether and would utilize Coinbase Custody Trust Company and the Bank of New York Mellon as custodians. The SEC’s decision to extend the review period is due to the need for additional time to thoroughly evaluate the proposed rule changes and the complex issues surrounding the classification of Ethereum and its suitability for a spot ETF.
This cautious approach by the SEC follows a similar delay for Grayscale’s Ethereum Trust proposal. Grayscale’s proposal seeks to convert into a spot ether ETF after successfully converting its Bitcoin trust earlier this year. The surge in applications for spot cryptocurrency ETFs, with industry giants like Fidelity and BlackRock joining the race, has prompted the SEC to exercise caution in its decision-making process.
Despite the delays and tempered expectations, the market’s interest in cryptocurrency investment vehicles remains strong. The SEC’s approval of spot Bitcoin ETFs earlier this year led to a significant influx of capital, with these ETFs attracting a cumulative net inflow of $12.39 billion.
In addition to the delay, the SEC has initiated a period of public comment regarding the potential approval of spot Ethereum ETFs. The commission is seeking feedback on proposals from Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum. However, SEC Chair Gary Gensler has cautioned against interpreting this as an endorsement of crypto assets or their regulatory status.
Industry figures, including VanEck CEO Jan van Eck and CoinShares CEO Jean-Marie Mognetti, have expressed skepticism about the approval prospects for spot Ethereum ETFs. They anticipate a prolonged period of inaction from the SEC on pending applications. Democratic Senators Laphonza Butler and Jack Reed have also urged SEC Chair Gensler to exercise caution in approving crypto-based ETFs, citing potential risks to investors and concerns about inadequate regulatory safeguards.