SEC Delays Decision on BlackRock and Grayscale Ethereum ETFs; Regulatory Challenges Persist

The United States Securities and Exchange Commission (SEC) has postponed its decision on BlackRock's proposed spot Ethereum exchange-traded fund (ETF) just a day before the deadline. The SEC cites the need for additional time to review the proposed rule change. Despite the deadline set for a final decision on BlackRock's spot Ether ETF by August 7, Bloomberg ETF analyst Eric Balchunas predicts a consolidated decision on all pending spot Ether ETFs in May, similar to the SEC's approach to 10 pending spot Bitcoin ETFs in January.

BlackRock's ETF in the Spotlight

The SEC has also delayed its decision on Grayscale Investments' spot Ethereum ETF, allowing public comments on the application. The SEC will consider whether to approve or disapprove a proposed rule change, deciding whether to list and trade Grayscale Ethereum Trust shares on NYSE Arca. Public comments will extend the decision deadline by an additional 35 days upon publication in the Federal Register.

SEC's Stance on Cryptocurrency

The SEC continues to be a consistent anti-crypto force in the United States. A report from Cornerstone Research reveals that in 2023, the SEC brought the highest number of crypto-related enforcement cases since 2013, indicating a prioritization of digital assets. With 46 enforcement actions, the SEC imposed $281 million in monetary penalties for settlements and tripled the number of administrative proceedings from the previous year.

FINRA's Findings on Crypto Communications

The Financial Industry Regulatory Authority (FINRA) reported that approximately 70% of surveyed crypto-related communications contained misleading claims or violated public communication guidelines. FINRA reviewed over 500 crypto asset-related retail communications and identified potential substantive violations of its rules. Violations ranged from podcasts to Super Bowl ad spots, including misleading claims about crypto and misrepresentation of federal securities laws' applicability to digital assets.

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Binance.US Faces Regulatory Challenges

Binance.US faces regulatory pressure as Florida and Alaska revoke its right to operate in their territories. Following the guilty plea of Binance's former CEO Changpeng Zhao, regulators in Alaska denied the renewal of Binance.US's license in January 2024. Florida's Office of Financial Regulation issued an emergency suspension order against Binance.US's money transmitter license. This move comes after agreements with regulators in Arkansas, Illinois, and South Dakota to allow continued operations in those states.

Abra Settles with Texan Regulators

Crypto lending firm Abra, allegedly insolvent since March 2023, has reached a settlement in principle with the Texas State Securities Board. Abra will return assets invested by Texas residents, initiating a wind-down of U.S. retail operations. The company will notify clients with balances over $10 to withdraw their assets within seven days. Unclaimed assets will be converted to fiat currency and directed to remaining Texas investors.