SEC Considers Fidelity Investments’ Proposed Ethereum ETF
Bloomberg ETF analyst James Seyffart estimates that the SEC’s decision deadline for Fidelity will likely be January 21, 2024, with the final decision expected on March 8, 2024.
The United States Securities and Exchange Commission (SEC) has recently opened the floor for public comments on Fidelity Investments’ proposed spot Ethereum (ETH) Exchange-Traded Fund (ETF). This development, if approved, could mark a breakthrough for US investors seeking exposure to the booming world of crypto.
The SEC’s Call for Public Input
In a notice dated November 30, the SEC invited “interested persons” to share their comments on Fidelity’s proposed Ethereum ETF. The proposal hinges on the Cboe BZX Exchange’s potential listing and trading of shares from Fidelity’s Ethereum Fund. This move follows Fidelity’s initial filing for the fund’s approval on November 17, placing the asset management firm among several others vying to introduce a spot crypto ETF in the United States.
The filing drew attention to a significant disparity in investment opportunities, noting that investors in countries such as Germany, Switzerland, and France had avenues to gain exposure to Ethereum through exchange-traded products.
However, the United States lacked a domestically regulated and Exchange-Traded Product for Ethereum. This discrepancy leaves US investors with limited and riskier options to access Ethereum, creating a potential threat to their investment assets.
Members of the public are granted a 21-day window to submit comments upon the filing’s publication in the Federal Register. Fidelity’s filing emphasizes the urgency of addressing the current void in regulated investment options. The filing argues that approving a spot ETH ETF would be a pivotal step in safeguarding US investors in the crypto space.
The SEC has outlined a timeline for its decision-making process. Within 45 days of the notice’s publication in the federal register, the SEC must either approve, disapprove, or initiate proceedings to determine whether to disapprove the proposed rule change. However, the SEC has the authority to extend the decision period by up to 90 days and an additional 60 days if necessary.
Bloomberg ETF analyst James Seyffart estimates that the SEC’s decision deadline for Fidelity will likely be January 21, 2024, with the final decision expected on March 8, 2024. Definitive deadlines are, however, anticipated to be announced in the coming weeks.
Fidelity Fights in a Competitive Environment
The move by Fidelity Investment to file for a spot Ethereum ETF came shortly after its competitor, BlackRock Inc (NYSE: BLK), filed for a similar fund. Both firms had earlier filed for spot Bitcoin ETFs in the summer of this year.
Notably, several other asset managers, including Ark Invest, VanEck, and Grayscale Investments, also have pending spot crypto ETF proposals, indicating a growing interest in providing investors with regulated exposure to cryptocurrencies.
However, the SEC has yet to greenlight any listing of a spot crypto Exchange Traded Product (ETP) for US markets. Recall that exchanges began trading shares of ETFs tied to Bitcoin futures in October 2021 through ProShares, Ethereum futures ETFs made their debut in October 2023.
The SEC’s historical reluctance to approve spot crypto ETFs has left many speculating about the potential for a positive shift in this stance. Market watchers and experts predict that the SEC is getting closer to authorizing a spot crypto ETF for US markets with a January projection set by top analysts.
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