SEC pushes back Ethereum ETF options decision to November

The United States Securities and Exchange Commission has delayed its decision regarding the approval of options trading for spot Ethereum ETFs.

In two separate filings, the SEC said it requires “sufficient time to consider the proposed rule change” that would allow Nasdaq ISE LLC and NYSE American LLC to offer options trading for spot Ethereum ETFs.

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.

BlackRock filed for the rule change for its ETHA product in August 2024, while Bitwise and Grayscale followed with their respective filings via NYSE American LLC during the same month. 

Initially, a final decision was expected by September 26 and 27, 2024, but the regulator has extended the review period to Nov. 10 and 11, 2024. 

This is typical under Section 19(b)(2) of the Securities Exchange Act. It gives the regulator more time to consider these decisions and aligns with its cautious approach towards crypto-related ETPs.

Meanwhile, on Sept. 20, the regulator approved options on BlackRock’s iShares Bitcoin Trust, allowing Nasdaq to list IBIT options under its continued listing standards. However, the approval came after an almost eight-month review period.

Nasdaq had to refile multiple amendments throughout this process, starting from Jan. 11, 2024, to provide additional information regarding Bitcoin-based ETPs. These amendments were necessary for the SEC’s thorough review, ensuring all regulatory concerns over market manipulation and other risks were addressed before approval.

The SEC’s extension comes amid declining interest in spot Ethereum ETFs, with the nine funds experiencing seven consecutive weeks of outflows. To date, these outflows have exceeded $620 million. In contrast, spot Bitcoin ETFs have recorded over $17 billion in inflows since launch.

In other news, BlackRock recently filed an amendment requiring its custodian, Coinbase, to process Bitcoin ETF withdrawals within 12 hours. 

This change came in response to rising concerns among investors about Coinbase’s transparency in handling Bitcoin assets. The quicker withdrawal process is intended to reassure investors that their holdings are being appropriately managed and not through “paper BTC” or IOUs.