SEC extends decision on Invesco and Galaxy’s Ethereum ETF

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on whether to approve or reject the spot Ethereum exchange-traded fund (ETF) proposed by Invesco and Galaxy Digital.

The SEC announced on Feb. 6 that it has initiated proceedings to determine whether to approve or disapprove the rule change submitted by Cboe BZX Exchange, which would allow it to list and trade shares of the Invesco Galaxy Ethereum Trust.

The SEC said that it has received comments from the public on the proposed rule change, which was published in the Federal Register on Nov. 8, 2023. The agency also said that it designated a longer period for approval on Dec. 13, 2023, extending the deadline to Feb. 6, 2024.

However, the SEC did not make a final decision by that date. Instead, it decided to further examine the proposal and solicit more comments from interested parties. The SEC asked commenters to address several issues related to the spot Ethereum ETF, such as the potential for fraud and manipulation in the underlying market, the adequacy of investor protection measures, and the consistency with the Exchange Act.

The SEC did not specify a new deadline for its decision, but said that comments should be submitted within 21 days of publication in the Federal Register, and that rebuttal comments should be submitted within 35 days of the same.

The Invesco and Galaxy spot Ethereum ETF is one of several similar proposals that are pending before the SEC. The agency has also delayed its decisions on the applications from Fidelity, BlackRock, and Grayscale, which are also seeking to launch spot Ethereum ETFs in the U.S.

The SEC has already approved several spot Bitcoin ETFs in January, which have attracted significant investor interest and trading volume. However, the agency has not yet given the green light to any spot Ethereum ETF, which would track the price of the second-largest cryptocurrency by market cap.

The approval of a spot Ethereum ETF could boost the adoption and liquidity of the Ethereum network, which supports various decentralized applications and smart contracts. However, the SEC may have more concerns about the regulatory and technical aspects of the Ethereum market, which is more complex and dynamic than the Bitcoin market.

According to a prediction market on Polymarket, a platform that allows users to bet on the outcome of various events, the probability of the SEC approving a spot Ethereum ETF by May is currently 43%. This suggests that the market is still uncertain about the SEC’s stance on the matter.

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