The US Securities and Exchange Commission has postponed determining whether to allow options for trading for Ethereum ETFs on the spot.
The SEC stated in two different filings that it needs “enough time to consider the proposed rule change” before allowing NYSE American LLC and Nasdaq ISE LLC to provide options trading for Ethereum ETFs on the spot.
Currently, BlackRock’s iShares Ethereum Trust (ETHA), Bitwise’s Ethereum ETF (ETHW), Grayscale’s Ethereum Trust (ETHE), and Ethereum Mini Trust (ETH) are the funds seeking the commission’s approval.
August 2024 saw BlackRock submit a rule modification request for its ETHA product, and that same month, Bitwise and Grayscale also filed through NYSE American LLC.
The regulator has extended the evaluation period until November 10 and 11, 2024, from the original deadline of September 26 and 27, 2024, for a final judgment.
According to Securities Exchange Act Section 19(b)(2), this is normal. It fits with the regulator’s cautious stance against ETPs tied to cryptocurrencies and provides it more time to think through these issues.
On September 20, however, the regulator gave the go-ahead for options on BlackRock’s iShares Bitcoin Trust, enabling Nasdaq to list IBIT options by its ongoing listing requirements.
However, the approval was granted following a nearly eight-month assessment procedure. Throughout this procedure, beginning on January 11, 2024, Nasdaq had to refile several revisions to disclose more details about Bitcoin-based ETPs.
In order to ensure that all regulatory concerns regarding market manipulation and other risks were addressed prior to clearance, these adjustments were required for the SEC’s comprehensive examination.
The SEC’s extension coincides with a drop in investor interest in spot Ethereum ETFs, as the nine funds have had withdrawals for seven weeks running.
These withdrawals have totaled more than $620 million thus far. On the other hand, Spot Bitcoin ETFs have seen inflows of almost $17 billion since its introduction.
In other events, BlackRock recently submitted an amendment mandating that Coinbase, its custodian, handle withdrawal requests for Bitcoin ETFs within a 12-hour window.
Investors’ growing worries regarding Coinbase’s openness in managing Bitcoin holdings prompted this modification. In order to ensure investors that their holdings are being properly managed and not through “paper BTC” or IOUs, a quicker withdrawal method has been implemented.
