The U.S. Securities and Exchange Commission (SEC) has announced a postponement in its decision regarding Franklin Templeton’s proposed spot Ethereum ETF, extending the deadline to June 11, 2024. This development, revealed through a public filing, has cast uncertainty over the fate of this financial product.

The proposed ETF, initially submitted in February, aims to track the price of ether and would utilize Coinbase Custody Trust Company and the Bank of New York Mellon as custodians.

The SEC’s decision to extend the review period reflects the need for additional time to thoroughly evaluate the proposed rule changes and the complex issues surrounding the classification of Ethereum and its suitability for a spot ETF. The commission stated, “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.”

This cautious approach mirrors a similar delay for Grayscale’s Ethereum Trust proposal, which seeks to convert into a spot ether ETF following the successful conversion of its Bitcoin trust earlier this year.

While analysts initially anticipated a decision in May, recent SEC delays have tempered expectations. Bloomberg's James Seyffart expressed skepticism, suggesting that the current round of Ether ETF applications might ultimately be denied. Bloomberg analyst Eric Balchunas revised his approval likelihood estimate from 70% to a more conservative 35%, reflecting the growing uncertainty.

Despite regulatory hurdles and dimmed expectations, the market’s appetite for cryptocurrency investment vehicles remains strong. The SEC’s earlier approval of spot Bitcoin ETFs in January 2024 led to a significant influx of capital, with these ETFs attracting a cumulative net inflow of $12.39 billion.

However, uncertainty prevails regarding spot Ethereum ETFs as the SEC takes a cautious approach. The commission has initiated a period of public comment regarding their potential approval, seeking feedback on proposals from Bitwise Ethereum Trust, Fidelity Ethereum Fund, and Grayscale Ethereum.

Industry figures, including VanEck CEO Jan van Eck and CoinShares CEO Jean-Marie Mognetti, have voiced skepticism about the approval prospects. Democratic Senators Laphonza Butler and Jack Reed have also urged SEC Chair Gensler to exercise caution in approving crypto-based ETFs, citing potential risks to investors and concerns about inadequate regulatory safeguards. As the SEC deliberates, the cryptocurrency market remains on edge, awaiting further clarity on the future of spot Ethereum ETFs.