SEC Extends Review of BlackRock’s Spot Ether ETP Proposal

The U.S. Securities and Exchange Commission on January 24, 2024 extended its review of Nasdaq’s proposal to list and trade shares of the iShares Ethereum Trust, moving the next procedural deadline to March 10, 2024.

The order did not approve or reject the proposed exchange-traded product. It gave the SEC more time to choose among three actions: approve the rule change, disapprove it, or open proceedings to determine whether it should be disapproved. That distinction mattered because the filing preserved every substantive outcome while postponing the first decision point.

The proposal was closely associated with BlackRock through its iShares business, but the rule-change application formally belonged to Nasdaq. If approved, the trust would have offered brokerage-account exposure to the spot price of ether without requiring investors to obtain and safeguard the token directly.

What the order changed

Nasdaq filed the proposed rule change on November 21, 2023 under Nasdaq Rule 5711(d), which governs Commodity-Based Trust Shares. The SEC published notice of the proposal in the Federal Register on December 11, 2023. Its January 24 order said the agency had received no comments and identified January 25, 2024 as the original 45th-day deadline.

Section 19(b)(2) of the Securities Exchange Act permits the SEC to designate a longer review period, up to the applicable statutory limit, when it publishes a reason for doing so. The agency said it needed sufficient time to consider the proposal and the issues it raised. It therefore designated March 10 as the date for its next action.

March 10 was not represented as a final approval deadline. The order explicitly allowed the SEC to begin further proceedings instead. Contemporary descriptions that treated the extension as either an approval or a rejection went beyond the document.

Bitcoin’s approval did not settle ether’s case

The institutional importance of the delay came from its timing. On January 10, 2024, the SEC had approved rule changes permitting multiple exchange-traded products holding spot bitcoin. That order opened a regulated exchange route to bitcoin exposure after years of rejected applications.

The January 24 ether extension showed that the bitcoin decision could not simply be copied across assets. The SEC’s bitcoin order rested substantially on evidence about the relationship between selected spot bitcoin markets and Chicago Mercantile Exchange bitcoin futures, together with exchange surveillance arrangements. The January 24 notice made no equivalent finding for ether and offered no view on whether Nasdaq had satisfied the governing fraud-prevention and investor-protection standards.

SEC Chair Gary Gensler reinforced that narrow framing in a media briefing reported on January 24. He said the bitcoin action was confined to bitcoin and should not be read as a broader decision about other crypto assets. That was a contemporaneous statement of caution, not a formal ruling on ether’s legal classification or the pending trust.

What remained uncertain

The order did not determine whether ether was a security or commodity, whether the proposed trust could begin trading, or whether its separate registration process would become effective. It also did not establish a timetable for competing ether products beyond this Nasdaq filing.

For institutions, the document was nevertheless consequential. It confirmed that a major exchange and one of the world’s largest asset managers were advancing spot ether exposure through the established exchange-rule process, while showing that the regulator was evaluating that product on a record distinct from bitcoin’s.

No event-day price, return, trading-volume or fund-flow inference can be drawn from the order itself. The development was procedural, but it marked the point at which post-bitcoin-approval expectations met the SEC’s asset-specific review process.