SEC Postpones Decision on BlackRock and Bitwise Spot Ethereum ETF Options

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Nasdaq’s proposed rule change to list and trade options on BlackRock’s iShares Ethereum Trust (ETHA).

Originally expected by September 26, the SEC’s decision has now been pushed back to November 10.

In a Thursday press release , the agency said the delay allows it to assess the potential implications of such a move on market stability.

Spot Ether ETF Options to Bring Additional Liquidity to Market

Approving options for a spot Ethereum exchange-traded fund (ETF) could further bridge the gap between digital assets and conventional finance.

Supporters argue that the introduction of such options would bring additional liquidity to the market and potentially stimulate bullish momentum.

If granted approval, the options would adhere to the same regulatory standards as other ETF-linked derivatives.

This would provide investors with new avenues to hedge against or speculate on Ethereum’s price fluctuations, enhancing the range of investment tools available for both retail and institutional investors.

The proposal, submitted on July 22, aims to modify existing rules to permit options trading on BlackRock’s iShares Ethereum Trust.

The trust itself is designed as a passive investment vehicle, holding Ethereum managed by Coinbase and cash reserves maintained by The Bank of New York Mellon.

Unlike other cryptocurrency funds, this trust does not engage in staking or other proof-of-stake validation activities, focusing purely on providing exposure to Ethereum’s price movements.

The SEC’s decision to delay is not unusual.

Under Section 19(b)(2) of the Securities Exchange Act, the regulator has the authority to extend its review period for up to 90 days to thoroughly evaluate the potential risks and benefits of the proposal.

The decision comes shortly after the SEC approved options trading for BlackRock’s iShares Bitcoin Trust (IBIT), following amendments to address concerns about market manipulation and excessive risk-taking.

In addition to postponing the ruling on BlackRock’s Ethereum options, the SEC has also delayed its decision on a separate proposal by NYSE American LLC.

The proposal involves listing and trading options on Bitwise’s Ethereum ETF, the Grayscale Ethereum Trust, and the Grayscale Ethereum Mini Trust, signaling that the regulatory body is meticulously scrutinizing all aspects of Ethereum-related financial products.

The uncertainty surrounding the SEC’s decision has coincided with significant fluctuations in the Ethereum ETF market.

On Monday, Ethereum ETFs recorded their largest net outflows since July, with over $79 million in withdrawals.

Grayscale’s spot Ether ETF (ETHE) led the decline, witnessing a single-day outflow of $80.6 million, the most substantial since the introduction of spot Ether ETFs earlier this year.

Spot Bitcoin ETFs See Inflows

Meanwhile, spot Bitcoin ETFs in the U.S. have experienced a contrasting trend, with net inflows reaching $135.95 million on Tuesday.

This marked the fourth consecutive day of positive inflows, with 12 funds accumulating over $390 million during this period.

BlackRock’s IBIT led the charge, attracting $98.89 million in net inflows, the highest since August 26. Bitwise’s BITB followed with $17.41 million, and Fidelity’s FBTC saw $16.80 million in inflows.

Tuesday also saw a rebound for Ether ETFs, with total daily inflows of $62.51 million after Monday’s sharp outflows.

BlackRock’s ETHA dominated the recovery, bringing in $59.25 million in net inflows.

VanEck’s ETHV and Invesco’s Ether ETF also posted modest gains of $1.94 million and $1.32 million, respectively.