The U.S. SEC has again postponed decisions on several crypto ETFs, including Bitwise's Ether staking ETF and Grayscale's XRP ETF.
Among altcoins, Litecoin is believed by some analysts to have a higher likelihood of receiving ETF approval earlier than others.
The SEC is following its due process by asking for public opinion on these delayed ETF proposals.
Industry analysts maintain that early approvals for most altcoin ETFs are unlikely.
Instead, more realistic timelines point towards late 2024 or early Q4 for any positive decisions.
This move comes just as ETF issuers flooded the agency’s desk with altcoin ETF applications, just as the SEC adjusts to the exit of its former chair, Gary Gensler.
Here’s what happened, why these delays were expected, and what it could mean for the crypto market as a whole.
The SEC announced on 20 May that it would be extending its decision on Bitwise’s new ETF filing.
Within the filing, Bitwise proposed to include Ether staking in its spot ETF, which would have been a major game changer for the ETF space.
The new deadline has now pushed the decision out by 45 more days and has given the SEC more time to consider the application.
In addition to Bitwise’s filing, the agency also delayed Grayscale’s XRP ETF filing and Bitwise’s Solana ETF application.
Each of these proposals are now set to undergo more proceedings and a public comment period before any final judgment can be passed.
Interestingly, these delays are not unusual.
According to Bloomberg ETF analyst James Seyffart, the SEC “typically takes the full time to respond to a 19b-4 filing.”
Insights on the ETF delays
According to Seyffart, most current filings have final deadlines set for October of this year, so any early decisions would be out of the norm.
While the SEC’s delays are slowing down approvals across the board, Seyffart pointed towards Litecoin as an interesting candidate.
“Litecoin is one that has a higher likelihood vs others of getting approved first,” he said.
Litecoin likely to be approved first
Even though he anticipates delays on Litecoin ETFs as well, he believes the asset has a better chance of crossing the finish line earlier than any other altcoin.
This is likely due to Litecoin's longer track record, more established market presence, and similarity to Bitcoin compared to newer tokens.
While the SEC insists that these ETF delays do not reflect its final position, the agency says that it is simply following due process and is considering each application for compliance with Section 6(b)(5) of the Exchange Act.
Two of the most famous applications involve XRP and Dogecoin (DOGE), both of which are being considered by Grayscale and 21Shares.
These ETFs would track indexes provided by CoinDesk and CME and plan to store assets through Coinbase Custody.
Such structure with these assets involves issuing shares in 10,000-unit blocks, with holdings limited to the respective digital asset.
The SEC is currently calling for public comments on these filings, with initial feedback due within 21 days of publication in the Federal Register.
Moreover, rebuttals are also allowed within 35 days.
Soon after the announcement, both DOGE and XRP saw sensible gains, with DOGE jumping 2.2% and XRP inching up by 0.2%.
If there’s one takeaway from this latest round of delays, it is that patience will be very important in the long run.
According to Seyffart, early approvals are unlikely before late June or July and more realistically, in early Q4 of this year.
Delays are expected
This slow-but-steady pace has become standard operating procedure at the SEC, despite its crypto-friendliness under the new administration.
Meanwhile, speculation around other altcoins continues to circulate, with prediction market PolyMarket currently showing Grayscale’s Solana ETF with an 82% chance of approval by the end of the year.
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