Ether ETFs in Regulatory Limbo: SEC Stalls Invesco Galaxy ETF Decision

The SEC postponed its decision on the Invesco Galaxy Spot Ethereum ETF again, adding to the uncertainty surrounding Ethereum ETFs as the regulatory body keeps extending its deadlines.

More Uncertainty For Invesco ETH ETFs

In a filing on Monday, the SEC once again postponed its decision on the proposed Invesco Galaxy Ethereum ETF. This delay, following the regulator’s previous extension of the deadline for Invesco’s application in February, underscores the significant regulatory hurdles facing the cryptocurrency market. 

The SEC’s decision delays are not isolated incidents but part of a broader trend. The regulator has delayed decisions on several spot ETH ETF applications, including those from BlackRock, Van Eck, Franklin Templeton, and Grayscale.

The filing read, 

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein.” 

Proposed Rule Change Pending Decision

The regulatory body’s handling of multiple spot ETH ETFs has been marked by uncertainty. The Invesco Galaxy spot ETH ETF application, initially slated for a decision on December 13, 2023, was met with a proposed rule change from the Cboe BZX Exchange on November 8. This change, published in the Federal Register, would allow the exchange to list and trade shares of the Invesco Galaxy Ethereum exchange-traded fund and require the SEC to take action within 45 days. 

SEC’s Delay Games

However, on December 13, just ten days before its decision was due, the SEC issued a notice stating it needed more time to decide on the proposed rule change. It stated that the commission had designated February 6, 2024, as the new date by which it would either make a decision or institute proceedings to determine whether to disapprove the proposed rule change. 

When February 6th rolled around, the SEC further pushed back its decision, claiming,

“Institution of proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change.”

Now, once again, in its May 6 filing, the SEC gave itself another 60 days to decide on the Invesco Galaxy spot ETH ETF, with the next deadline set to July 5.

Analysts Losing Hope For ETH ETF

This comes as the May 23 deadline for the SEC to decide on Van Ecks’ spot ETH ETF application draws near. According to ETF analyst James Seyffart, this is the only deadline that matters, claiming his “cautiously optimistic” attitude toward the pending Ether ETF applications had changed. As of March 20, he expects that all applications for an Ether ETF will “ultimately be denied” by the SEC on May 23.

Insights from ETF analysts, such as Eric Balchunas, provide valuable context to the SEC’s decision delays. Balchunas, who had previously predicted the odds of the SEC approving ETH ETFs at 50%, has now revised his estimate to just 35%. His skepticism is rooted in the prolonged period of “radio silence” from the SEC to prospective fund issuers, combined with increasing political pushback for SEC Chair Gary Gensler. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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