BlackRock, the world's leading asset manager, is reconsidering its push for a spot Ethereum ETF due to tepid demand, coinciding with the U.S. Securities and Exchange Commission's (SEC) delay in approving Grayscale's Ethereum Futures ETF, adding to the pressure on Ethereum's price.

BlackRock Wavers on Ethereum ETF Amid Client Preference for Bitcoin, SEC Delays Decision

During a fireside chat at the Friday Bitcoin Investor Day conference in New York, BlackRock's head of digital assets, Robert Mitchnick, emphasized the firm's clients' primary focus on Bitcoin, per CoinGape.

"I can say that for our client base, bitcoin is overwhelmingly the number one focus, and a little bit of it is Ethereum." He said that the demand for all other cryptocurrency assets is "very, very little"

However, he declined to comment on whether BlackRock will continue its pursuit of Ethereum ETF approval. BlackRock hired Digital Assets Product Strategist Matt Kunk last week to lead the company's efforts with iShares digital asset ETFs. Proponents of Ethereum have defended the asset class.

For now, the US Securities and Exchange Commission has delayed BlackRock's Ethereum ETF application until May 2024. Discussions about whether BlackRock will pursue ETFs for other digital assets have been ongoing. Mitchnick clarified that the cryptocurrency industry needs to know the asset manager's intentions to provide various other services. "That's not our primary focus," he emphasized.

On the other hand, BlackRock continues to investigate the industry. The asset manager recently announced the launch of its BUIDL stablecoin on the Ethereum blockchain as part of its tokenization efforts.

SEC's Security Tag on Ethereum Could Hamper ETF Approval, Industry Leaders Rally Support

Vital industry discussions suggest that the US SEC is considering putting a security tag' on Ethereum, as they did with XRP. This could further reduce the Ethereum ETF's chances of being approved by the securities regulator.

According to Alex Thorn, head of firmwide research at Galaxy Digital, if the SEC is investigating crypto firms' interactions with the Ethereum Foundation, it may be looking into whether the original Ethereum initial coin offering (ICO) in 2014 was an unregistered securities offering, rather than simply categorizing current secondary trading of ETH as securities trading.

Thorn speculated that, while the SEC may distinguish between the ICO and current secondary trading of ETH, taking enforcement action against the Ethereum Foundation nearly a decade later would be "highly unusual."

However, crypto industry players such as Coinbase have come out supporting Ethereum, arguing that the CFTC and SEC cannot have opposing views on the asset class.

SEC Delays Decision on Grayscale Ethereum ETF, Extending Uncertainty in Crypto Markets

The United States Securities and Exchange Commission has postponed its decision on Grayscale Ethereum Futures Trust's Ethereum ETF application. According to the document filed on March 22, the new deadline is May 30.

Under the Securities Exchange Act of 1934, the agency has 180 days, or six months, from publishing the proposed rule change notice. Grayscale submitted its application in September, and the agency postponed its decision until November. In its latest filing, the SEC stated:

"The Commission finds that it is appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised therein."

In a recent X post, Bloomberg ETF analyst James Seyffart stated that the delay was expected. Seyffart, who has previously suggested that Grayscale is strategically maneuvering to secure SEC approval for a spot in Ethereum ETF, emphasized Grayscale's deliberate approach.

On several occasions, the agency has postponed its decision-making process for Grayscale's ether futures ETF. However, it's worth noting that the SEC approved a group of ether futures ETFs in October 2023, including offerings from ProShares, VanEck, and Bitwise.

Ethereum and Solana Collaborate Amid SEC Scrutiny, ETH Faces Market Volatility and Whale Interest

As previously reported by a source, the Ethereum community joined forces with Solana in response to ongoing security concerns raised by the Securities and Exchange Commission (SEC). Concurrently, Ethereum's native cryptocurrency, ETH, has experienced a significant 18% retracement since its peak on March 11. As of press time, Ethereum is trading 5.16% lower at $3,326 with a market capitalization of $400 billion.

Furthermore, Ethereum whale activity in the cryptocurrency market peaked in 2024, indicating increased interest and activity among large-scale investors.

Analysts emphasize the importance of tracking ETH wallets' 30-day average returns, indicating a good buying opportunity. Ethereum's Relative Strength Index (RSI) has fallen to 28.5, its lowest level since the price bottomed in late January.

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