SEC Delays Decision on Franklin Templeton’s Spot Ethereum ETF, Future Uncertain
The U.S. Securities and Exchange Commission (SEC) has announced a delay in its decision regarding Franklin Templeton’s proposed spot Ethereum ETF, extending the deadline to June 11, 2024. This news has left the future of spot ETH ETFs uncertain for the time being.
The proposed ETF, which was initially filed in February, 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 comes from a 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.
Industry analysts had initially anticipated a decision in May, but recent delays have tempered expectations. Bloomberg analyst Eric Balchunas revised his approval likelihood estimate from 70% to a more conservative 35%, highlighting the growing uncertainty.
Despite the regulatory hurdles and dimmed expectations, the market’s appetite for cryptocurrency investment vehicles remains strong. The SEC’s earlier approval of spot Bitcoin ETFs in January 2024 led to a substantial influx of capital, with these ETFs attracting a cumulative net inflow of $12.39 billion.
The SEC has also initiated a period of public comment regarding the potential approval of spot Ethereum ETFs, seeking feedback on proposals from Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum. However, the likelihood of approval for spot ETH ETFs seems to have considerably waned, with industry figures expressing skepticism about the approval prospects.
Democratic Senators have urged SEC Chair Gary Gensler to exercise caution in approving crypto-based ETFs, citing potential risks to investors and concerns about inadequate regulatory safeguards. The future of spot Ethereum ETFs remains uncertain as the SEC continues to evaluate the complex issues surrounding their classification and suitability.
