U.S. Ethereum ETF delayed – How Hong Kong now leads the race

• The U.S. SEC delayed the decision on Grayscale and Franklin Templeton proposals. 
• Grayscale planned to spin off a Mini Ethereum Trust after ETHE conversion to ETF.   

In a not-so-surprising move, the US Securities and Exchange Commission  (SEC) has delayed the decision on the next steps for Grayscale and Franklin Templeton’s proposed spot Ethereum [ETH] ETFs. 

The SEC has pushed the decision for Franklin Templeton and Grayscale’s applications to the 11th and the 23rd of June, respectively. 

On the delayed decision for the proposed conversion of Grayscale Ethereum Trust [ETHE] to ETF, the SEC noted,

“The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change, as modified by Amendment No. 1, and the issues raised therein.”

Grayscale unveils plan to spin off ETHE to a Mini Trust

SEC communicated the delayed decision on the 23rd of April. On the same day, Grayscale announced a plan to spin off a Mini Ethereum Trust, probably with lower fees from its ETHE.

Part of the statement read,

“Our goal is for $ETH to launch as a spin-off from $ETHE. The 14C describes the mechanics of how shares of Grayscale Ethereum Mini Trust would be spun-off and distributed to ETHE shareholders, again subject to regulatory approval.” 

There were other movements on the spot ETH ETF proposals. Bloomberg ETF analyst James Seyffart termed them “standard” as he summarized the new developments. 

“Bunch of movement on #ethereum ETFs from multiple issuers & SEC: Grayscale Just filed their S-3/prospectus for converting $ETH, (expected & standard) SEC delayed decisions on Grayscale & Franklin, BlackRock filed amendment to their 19b-4 ETH ETF application”

Reacting to Seyffart’s summary, Bloomberg ETF analyst Eric Balchunas saw the movement as a “vain” attempt to seek the SEC’s attention. 

He emphasized,

“Great summary of all the action.. which looks like a final nudge to try and get the SEC’s attention, although most likely in vain. We  were pessimistic on approval bf it was cool and we’re pessimistic now too.”

Most ETH investors will now focus on Hong Kong ETFs, as the US spot ETH ETF May rejection looks more profound.

On Polymarket, a prediction markets platform, May approval bets for US spot ETH ETFs dropped below 15%. 

Hong Kong spot ETH ETFs will officially begin trading on the 30th of April, with issuers setting fees below 1% as fee wars loom.

That said, ETH was trading at $3150 at the time of writing. Whether the Hong Kong ETFs will boost ETH to retest by $4K remains to be seen.