SEC Postpones Decision on Key Cryptocurrency ETFs
The U.S. Securities and Exchange Commission (SEC) has recently decided to delay its review of four significant cryptocurrency exchange-traded product filings. This includes initiating formal proceedings for spot XRP and Dogecoin ETFs, while extending the evaluation period for an Ethereum staking amendment.
SEC’s Decision on XRP and Dogecoin ETFs
In announcements made on May 20, the SEC has outlined extended review periods for several ETFs. This includes the 21Shares Core XRP Trust, the Grayscale XRP Trust, and the Grayscale Dogecoin Trust. Concurrently, a separate notice has deferred Bitwise’s proposal to incorporate staking in its Ethereum ETF. These delays invite public commentary and clarify that the initiation of proceedings does not imply any preconceived conclusions by the Commission.
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According to Section 19(b)(2)(B) of the Exchange Act, the SEC now has a maximum of 240 days from the initial filing dates to make a decision, setting the final deadlines in early October. Stakeholders will have 21 days post-publication in the Federal Register to provide comments and 35 days for rebuttals. The extended timeframe is deemed necessary to determine if the proposed ETF structures adequately prevent fraudulent and manipulative practices while considering investor protection.
Industry Reactions to the SEC Delay
James Seyffart, an ETF analyst at Bloomberg Intelligence, described these delays as standard rather than restrictive. He noted that such postponements are typical, with the SEC generally utilizing the full review period for a 19b-4 filing. Seyffart suggested that any early approvals would not occur before late June or early July. He also speculated that the Litecoin ETF might face similar delays, although it might have a higher chance of being approved compared to others.
Nate Geraci, President of The ETF Store, shared a similar perspective. He remarked that the SEC’s decision to delay was anticipated and expressed confidence that all proposals would eventually receive approval. However, he emphasized that clarity on the tax treatment of staking rewards from the Internal Revenue Service remains pending, which could impact the final decisions on these ETFs.
Market Developments & Future Outlook
Recent market activity has seen the CME Group launch standard and micro XRP futures, offering the first CFTC-regulated venue for leveraged exposure to XRP. Analysts believe the infrastructure required for these futures will be crucial for any surveillance-sharing agreements the SEC might require for spot products. Despite modest initial trading volumes, these developments are seen as foundational steps for the eventual approval of spot XRP ETFs.
Looking ahead, the timetable for SEC approval is now clearer. Assuming no early approvals, the public commentary period will extend into mid-summer, with a final decision on XRP, Dogecoin, or Ethereum staking structures expected in the fourth quarter. Analyst James Seyffart predicts that any early approvals from the SEC on these assets are unlikely before late June or early July, with a more probable outcome in early Q4.
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