The Securities and Exchange Commission (SEC) has chosen to extend the comment period for a proposed rule change concerning the listing and trading of Grayscale Ether ETF Trust shares as an exchange-traded fund (ETF) on NYSE Arca.
Originally submitted on October 10th, the SEC, instead of the typical 45-day review period, has pushed the decision timeline to January 25th, 2024, indicating a need for further consideration.
The suggested rule change aims to permit the $5 billion Grayscale Ethereum Trust, a significant institutional investment vehicle for Ether, to transition into a spot ETF.
Grayscale Explores ETF Conversion for Enhanced Liquidity and Regulatory Integration of Ethereum
Unlike the current trust structure that lacks redemption options, an ETF conversion could enhance liquidity and potentially eliminate the persistent discount at which the trust historically trades compared to the net asset value of its underlying Ether holdings.
Grayscale envisions this move as a natural evolution, integrating Ethereum more deeply into the regulated financial system. However, the SEC has yet to greenlight a spot crypto ETF in the U.S., having deferred decisions on multiple Bitcoin ETF applications earlier in the year.
This extension coincides with recent submissions from financial giants like Fidelity and BlackRock, who have proposed their own spot Ethereum ETFs.
SEC Extends Fidelity and Grayscale Ether ETF Decision to 2024
The SEC has also initiated a comment period to gather public input on Fidelity’s filing. Despite growing institutional interest, the SEC remains cautious, delaying decisions and seeking additional feedback to comprehensively assess risks of market manipulation, surveillance mechanisms, custodial qualifications, and other factors related to the crypto asset class.
The anticipation for the SEC’s decision on Grayscale’s ETF conversion extends into early 2024. The financial industry is keenly watching to see if the regulatory body will finally approve accessible, regulated crypto investment vehicles for the U.S. market.
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