BlackRock and Grayscale Adjust Ethereum ETF Applications Amid SEC Delays

Following the SEC's decision to postpone its verdict on multiple proposals for Ethereum ETFs, both BlackRock and Grayscale have made amendments to their spot Ethereum exchange-traded fund (ETF) applications.

BlackRock, a major investment firm, has submitted an updated 19-b 4 filing, outlining a proposed rule change for its iShares Ethereum Trust. Notably, the amendment suggests a shift to cash-based creation and redemption processes, departing from the initial plan of in-kind transactions involving Ethereum. Authorized participants will now solely transact in cash for creating and redeeming shares, eliminating the direct involvement of Ethereum in the process. This adjustment aligns with the structure of other Ethereum ETF applications and previously approved spot Bitcoin ETFs in the United States.

Meanwhile, Grayscale has taken steps to convert its existing Grayscale Ethereum Trust into a spot Ethereum ETF. Leveraging the trust's existing SEC registration, Grayscale filed an S-3 registration statement instead of the typical Form S-1. Additionally, Grayscale filed a Form S-1 registration document for a mini Ethereum ETF, mirroring its strategy for a mini Bitcoin ETF (BTC). These ETFs are slated to trade on NYSE Arca under the tickers ETHE and ETH, respectively.

The flurry of filings coincides with the SEC's recent announcement of a delay in its decision regarding spot Ethereum ETF proposals from Grayscale Investments and Franklin Templeton. Initial hopes for swift approval of such ETFs following the SEC's reluctant approval of spot Bitcoin ETFs in January have diminished. Despite earlier optimism, projections from JP Morgan and Bloomberg Intelligence suggest relatively low probabilities of spot Ethereum ETF approval by May.

Despite the uncertain regulatory outlook, the persistence of ETF issuers underscores their commitment to navigating the evolving landscape of cryptocurrency investment products.