The US Securities and Exchange Commission (SEC) has once again postponed its decision on the applications for Ethereum ETFs from ARK 21Shares and Hashdex.
A document dated March 19, 2024, has been published on the SEC's official website, according to which the regulator needs additional time to assess the prospects of the market impact of the Ethereum ETF launch and potential regulatory challenges.
The document states, "After instituting a proceeding, the Commission must issue an order approving or disapproving the proposed rule change no later than 180 days after the date of publication of the notice of filing of the proposed rule change. The Commission may extend the time for issuing an order approving or disapproving a proposed rule change, for not more than 60 days if a longer period is appropriate."
Based on this, the SEC has determined that a longer period is warranted for the issuance of an approval or disapproval decision because it will need time to review the rule change and the issues it raises.
The deadline has been extended to May 30, 2024. That's the date the Commission set as the new deadline for a decision.
Bloomberg analysts James Seyffart and Eric Balchunas believe it's highly likely that Ethereum ETF applicants will face a regulatory rejection in May.
"The odds of ETH ETF approval have dropped to 35% by May. I know all the reasons why the SEC should approve them, but now there are no signs for optimistic predictions as it was 2.5 months ago when spot BTC ETFs were approved," said Eric Balchunas.
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James Seyffart has a similar outlook: "My cautiously optimistic stance on ETH ETFs has changed in recent months. We believe that this round will ultimately be rejected on May 23.”
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The analysts base their conclusions on the SEC's lack of communication with ETF applicants, which contrasts with the regulator's behavior in approving Bitcoin ETFs. "The SEC has not communicated with issuers on Ethereum-specific issues. Quite the opposite of Bitcoin ETFs."
Seyffart also wrote that we should expect the SEC to delay reviewing applications from other funds in the near future. "We will probably see at least three more ETH ETF delays today/tomorrow." VanEck, Ark/21Shares, Hashdex, and Grayscale could face delays.