SEC Postpones Decision on Invesco Spot Ethereum ETF

The SEC will decide on the Invesco application by July 5.

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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: James Rubin

The Securities and Exchange Commission (SEC) has delayed its decision on a rule change that would allow an Invesco Galaxy spot Ethereum exchange traded fund to begin trading, the agency said in a filing posted Monday.

The SEC extended its deadline by 60 days and will decide whether to approve or reject the Invesco application for the rules change by July 5. 

“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,” the SEC said in the filing. 

The SEC has already delayed applications for spot Ethereum ETFs from BlackRock Inc., Fidelity Investments, VanEck, and ARK Invest in recent months. The proposed funds are unique from Ethereum futures funds, which the SEC approved last year, because they are based primarily on ether—the cryptocurrency of the Ethereum blockchain—instead of futures contracts. The agency has final deadlines of May 23 to rule on the VanEck application and May 24 to decide on ARK. 

Yet the SEC has hesitated to approve the spot Ethereum ETFs over concerns about market manipulation and fraud, which agency Chairman Gary Gensler has argued plague digital assets, and which presented an obstacle before the Jan. 10 approval of 10 spot bitcoin ETFs (an 11th fund subsequently started trading in March). 

Read More: SEC Delays Decision on Allowing Spot Bitcoin ETF Options Trading

After soaring for more than a year, ether's price has dropped 10% over the past month to trade just above $3,000, as investors spooked by inflation and macroeconomic uncertainties have shied away from risk-on assets. Ether hit an all-time high near $4,200 in March, according to cryptocurrency markets data provider CoinMarketCap.  

Optimism for Spot Ethereum ETF Approval Wanes

Meanwhile, optimism that the SEC will approve spot Ethereum ETFs has waned, with Gensler reiterating on different occasions that approval of one type of spot digital asset fund did not mean the agency would approve others.

Analysts have noted the agency’s lack of back-and-forth with issuers in recent weeks, similar to the final run-up before the agency's approval of spot bitcoin funds. The SEC was able to satisfy its consumer protection concerns about the spot bitcoin ETFs in a flurry of meetings with issuers during the weeks preceding their approval. 

Bloomberg ETF analysts Eric Balchunas and James Seyffart have lowered their odds of spot Ethereum ETF approval in May from roughly 75% to 25%. 

Issuers are optimistic that ether-based funds could generate robust inflows amid rising market interest in cryptocurrency investments. The 11 spot bitcoin ETFs have generated about $11.7 billion in inflows and have a combined assets under management of about $55 billion after only four months of trading, according to U.K.-based investment management firm Farside Investors.  

Read More: BlackRock's IBIT Has 1st Outflows as Crypto Fervor Dips

Contact Lucy Brewster at [email protected].

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.