SEC delays Fidelity’s Ethereum spot ETF, but decisions are still expected in May

The U.S. Securities and Exchange Commission (SEC) said on Jan. 18 that it has delayed its decision on Fidelity’s proposed spot Ethereum ETF.

More specifically, the decision concerns a proposed rule change that would allow Cboe BZX to list and trade shares of Fidelity’s planned fund.

The SEC noted that the proposed rule change was originally filed on Nov. 17, 2023 and published for comment in the federal register on Dec. 6, 2023.

The SEC said today that, based on those dates, it was previously required to approve, reject, or institute proceedings determining whether to disapprove the proposed rule change by Jan. 20.  However, it has now chosen to use a provision that allows it to extend that deadline by 45 days to March 5, 2024.

It is likely that the SEC will choose to institute proceedings around Fidelity in March, as it done for certain other pending funds.

SEC expected to decide on ETH ETFs in May

Bloomberg ETF analyst James Seyffart said today that the Fidelity delay was “completely expected” and asserted that late May deadlines “really matter.”

That May deadline appears to be related to the fact that the SEC must either approve or reject  VanEck’s competing spot Ethereum ETF proposal by May 23.

As the SEC has already instituted proceedings on VanEck’s application, it cannot delay its decision any further. And because the SEC generally approves similar ETFs together, it will likely decide on all pending spot Ethereum ETFs in late May, even though other applications have later deadlines.

It should also be noted that Fidelity, VanEck, and several other applicants succeeded in gaining approval for spot Bitcoin ETFs on Jan. 10. The success of those Bitcoin ETFs does not guarantee that Ethereum ETF proposals will also gain approval.

Public expectations are divided: one prediction market on Polymarket currently reports 54% odds in favor of spot Ethereum ETF approvals.