SEC Delays Grayscale Ethereum Trust ETF Again, Questions Whether Proof of Stake is Susceptible to Manipulation by a Few Entities?

If the May 23rd deadline is not met, Bloomberg ETF analyst James Seyffart believes it may not happen until 2025.

SEC Further Delays Grayscale Ethereum Spot ETF

According to official documents, the U.S. Securities and Exchange Commission (SEC) has once again postponed the approval of the Grayscale Investments Ethereum Spot ETF on January 25, following a previous delay on December 5 last year, and has opened it for public comments.

When guiding the public comments, the SEC raised the following concerns:

• Is Ethereum Proof of Stake vulnerable to manipulation by a few entities?

• What are the views on Ethereum's liquidity, transparency, and market sensitivity to manipulation?

• What are the views on the correlation between the ETH spot market and the CME ETH futures market?

• Given that CME ETH futures are a regulated market, do bad actors also need to manipulate CME ETH futures to influence volatility?

• Do the above characteristics raise concerns among the public about Ethereum being susceptible to fraud and manipulation?

The SEC stated that comments must be submitted within 21 days, with a rebuttal period lasting 35 days, and recently, the SEC also delayed the approval of the Bitwise Ethereum ETF.

SEC Delays Bitwise Ethereum Spot ETF, to Decide Again on March 10

Bloomberg Analyst: 60% Chance of Approval

Regarding the likelihood of approval for the Ethereum Spot ETF, Bloomberg ETF analyst James Seyffart told Blockworks:

I basically think the SEC has about a 60% chance of approving all Ethereum Spot ETFs, but they have many ways to delay. So if the SEC wants to prepare and hopes all issuers move forward simultaneously, the SEC will most likely approve on May 23, unless the SEC finds a way to reject or delay the entire process.

On the contrary, if it doesn't pass on May 23, James Seyffart believes it will have to wait until 2025.

In November last year, James Seyffart predicted a 90% chance of approval for a Bitcoin Spot ETF.

Three Bitcoin Spot ETFs to Be Delayed, Analyst: 1 in 10 Has a 90% Chance of Approval

Does the Grayscale Lawsuit Still Affect SEC Decisions?

In addition to Bitwise and Grayscale, Ark 21Shares and VanEck are also seeking approval for an Ethereum ETF, with May 23 being the 240-day window for the SEC to approve or reject the proposals from Ark/21Shares and VanEck.

Venture capitalist Scott Johnsson of Van Buren Capital pointed out that the outcome of the Grayscale lawsuit will still play a role in the approval of the Ethereum ETF:

It can be said that this ruling has opened the door for BTC, which has also put the SEC in a logical dilemma.

Read More About SEC's Logical Flaws! Why the Court Finds SEC's Rejection of Grayscale Ethereum Spot ETF Application Unreasonable