Fidelity Ether ETF Faces Delay Amid Influx of Leveraged Bitcoin ETF Applications

eth coin

In a day marked by regulatory developments in the cryptocurrency space, Fidelity’s bid for a spot Ethereum exchange-traded fund (ETF) faces a delay, coinciding with the submission of five new leveraged Bitcoin ETFs seeking approval from the Securities and Exchange Commission (SEC).

The SEC, on January 18, announced the extension of the deliberation period for Fidelity’s Ether ETF bid, citing the need for additional time to thoroughly evaluate the proposed rule change and the associated concerns. The decision date is now slated for March 5, with Bloomberg ETF analyst James Seyffart expressing his expectation for the delay in a Twitter post on the same day.

Seyffart emphasized that the crucial dates to watch are in late May, pointing to the SEC’s final deadline of May 23 for approving or denying VanEck’s Ether ETF. Analysts speculate that the SEC might follow a similar approach as it did with spot Bitcoin ETFs, approving multiple spot Ether ETFs simultaneously.

While Fidelity grapples with the delay, Direxion entered the arena by filing for five Bitcoin ETFs with the SEC on January 18. This move comes in the wake of ProShares filing for five leveraged Bitcoin-tracking ETFs on January 16 and REX Shares filing for six leveraged Bitcoin ETFs on January 3.

Direxion’s filing outlines plans for 1x, 1.5x, and 2x long leveraged Bitcoin funds, along with corresponding short leveraged funds. Bloomberg ETF analyst Eric Balchunas noted the unprecedented scenario where leveraged Bitcoin ETFs might soon outnumber their long-only counterparts.

Opinions within the cryptocurrency community vary on the likelihood of the SEC approving spot Ether ETFs. Balchunas, optimistic about approval, places a 70% chance for spot Ether ETF approval by May, aligning with the SEC’s final deadline for VanEck’s fund. In contrast, Mark Yusko, the CEO of Morgan Creek Capital, remains cautious, asserting that the SEC may still harbor hostility toward cryptocurrencies and could potentially classify Ethereum (ETH) as a security, unlike Bitcoin, which SEC Chair Gary Gensler considers a commodity. As the regulatory landscape evolves, the fate of spot Ether ETFs remains uncertain.


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