SEC postpones decision on Fidelity’s spot Ethereum ETF until March

The U.S. Securities and Exchange Commission (SEC) has extended its deadline to review Fidelity’s proposal for a spot Ethereum exchange-traded fund (ETF) by 45 days, according to a document filed on Thursday.

The SEC said it needed more time to consider the proposed rule change and the issues raised by the public comments. The new deadline is March 5, 2024.

Fidelity filed for the Fidelity Ethereum Fund in November 2023, hoping to become the first provider of a spot Ethereum ETF in the U.S. The fund would track the price of ether, the native cryptocurrency of the Ethereum network, and hold the digital asset in cold storage.

In its filing, Fidelity cited a court ruling from October 2023, where judges overturned the SEC’s rejection of a spot Bitcoin ETF from Wilshire Phoenix. The judges said the SEC failed to provide a rational basis for its decision and did not adequately consider the evidence presented by the applicant.

The SEC has recently approved 11 spot Bitcoin ETFs, which began trading last week. This has sparked speculation that a spot Ethereum ETF could be next, as ether is the second-largest cryptocurrency by market capitalization and has a similar regulatory status as bitcoin.

However, the SEC has also expressed concerns about the potential risks and challenges of investing in crypto assets, such as volatility, liquidity, fraud, manipulation, cybersecurity, and custody.

Fidelity is not the only firm vying for a spot Ethereum ETF. BlackRock, the world’s largest asset manager, also filed for a similar product in December 2023, along with several other companies. Before the spot products, the SEC had already approved several futures-based Ethereum ETFs, which track the price of ether futures contracts rather than the underlying asset.

A spot Ethereum ETF would offer investors a more direct and cost-effective exposure to the cryptocurrency, as they would not have to deal with the complexities and fees of futures contracts or the technicalities and risks of holding the digital asset themselves.

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