The SEC extended the review period for the Grayscale Spot ETH Workshop ETF until 2024

A successful conversion to a spot ETF may narrow the discount between Grayscale ETH Trust and its underlying assets, but this will not happen in 2023.

According to the SEC, the U.S. Securities and Exchange Commission (SEC) extended its 45-day comment period on proposed rule changes that would allow NYSE Arca to list and trade Grayscale ETH Trust stock as an exchange-traded fund (ETF) documented Dec. 5.

NYSE Arca initially filed a proposed rule change with the SEC on October 10 of this year. Typically, the U.S. Securities and Exchange Commission (SEC) has 45 days to make a decision after publishing the proposal in the Federal Register, but regulators have chosen to extend this period until January 25, 2024, to allow more time to consider the implications.

The proposed rule change would allow $5 billion of Grayscale ETH Trust, one of ETH Place’s largest institutional investment vehicles, to convert to a spot ETF. Unlike current trust structures, which do not allow redemptions, ETFs will provide more liquidity and can remove long-term discounts from the trust’s history compared to the net asset value of the underlying ETH it holds.

Grayscale said they see switching to ETFs as a “natural next step in product development” that will further integrate ETH into the regulated financial system. However, the SEC has yet to approve spot crypto ETFs in the U.S., having postponed its decision on multiple BTC ETF applications earlier this year.

ETF Mania

The U.S. Securities and Exchange Commission’s (SEC) decision has also been extended as other major financial institutions, such as Fidelity and BlackRock, have submitted their own proposals for spot ETFs in ETH Square over the past month. The SEC also recently opened a comment period to solicit public feedback on Fidelity’s filings.

Despite the continued growth of institutional interest, the SEC has maintained a cautious stance, delaying its decision and calling for more commentary to fully assess market manipulation risks, monitoring mechanisms, custody eligibility, and other factors related to the crypto asset class.

With Grayscale’s decision likely to be made in early 2024, all eyes are on the SEC to see if it finally gives the green light to an accessible, regulated crypto investment vehicle in the U.S. market.