Crypto Exchange-Traded Fund Race Heats Up: Fidelity Faces SEC Delay Amid Five Bitcoin LETFs Filing

The U.S. Securities and Exchange Commission (SEC) delayed its deadline to decide on American multinational financial services firm Fidelity's application for a spot Ethereum exchange-traded fund (ETF) until March 5, 2024. The SEC's announcement coincided with the submission of five additional leveraged Bitcoin ETFs from Direxion.

The regulatory authority emphasized the need for an extended evaluation period to make an informed decision regarding approval, disapproval, or the initiation of further proceedings on Fidelity's application.

"The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein," the regulatory authority said last Friday.

James Seyffart, an ETF analyst at Bloomberg Intelligence, offered insights into the SEC's postponement, characterizing it as "completely expected."

Additionally, he emphasized the significance of late May, alluding to the SEC's ultimate deadline of May 23 for rendering a decision on VanEck's Ether ETF proposal.

There is speculation among analysts that the SEC might adopt a similar approach as it did with spot Bitcoin ETFs, potentially approving multiple pending spot Ether ETF applications concurrently.

Fidelity submitted its proposal for the establishment of the Fidelity Ethereum Fund in November citing a court ruling in the preceding year that raised questions about the SEC's denial of spot cryptocurrency ETFs, despite approving products based on futures contracts.

The latest development came at the heels of the five leveraged Bitcoin ETF filings from Direxion, a provider of financial products known for its leveraged ETFs.

A leveraged exchange-traded fund (LETF) employs financial derivatives and leverage through debt instruments to magnify the performance of its underlying index, individual stocks, specific bonds, or currencies.

In contrast to a traditional ETF, which generally seeks to replicate the holdings of its underlying index on a one-to-one basis, a LETF typically targets a 2:1 or 3:1 ratio, aiming to amplify returns accordingly.

At 1:46 a.m. ET on Monday, Ethereum was experiencing a downward trend, trading at $2,432.08, accompanied by a 24-hour trading volume of $6,519,013,298.

The recent price movement of this cryptocurrency reflects a 1.59% decrease in value over the preceding 24 hours and signifies a 3.27% decrease for the last seven days.

In terms of supply dynamics, Ethereum currently boasts a circulating supply of 120,177,941 ETH, contributing to a total market capitalization of $292,049,141,944, as seen in the data from CoinMarketCap.