SEC’s ETF Decision Delays: A Routine Move?

As the cryptocurrency market continues to evolve, the regulatory landscape remains a focal point of uncertainty. The recent decision by the United States Securities and Exchange Commission (SEC) to delay its ruling on multiple exchange-traded funds (ETFs) linked to various digital assets, including XRP, Solana, Litecoin, and Dogecoin, is the latest development in this ongoing saga. However, despite the seeming roadblock, industry experts suggest that this postponement is not an indication of rejection but rather a procedural step in line with past regulatory practices.

A Standard Delay, Not a Cause for Concern

On March 11, the SEC issued a series of filings stating that it had “designated a longer period” to review proposed rule changes that would allow these ETFs to proceed. Among the affected products are Grayscale’s XRP ETF and the Cboe BZX Exchange’s proposal for a spot Solana ETF, both of which have seen their decision timelines extended until May.

While such delays might initially seem troubling to investors and industry watchers, Bloomberg’s ETF analyst James Seyffart was quick to dispel concerns. In a March 11 post on X, Seyffart explained that “the SEC just punted on a bunch of altcoin ETF filings,” but he reassured that this was nothing out of the ordinary. “It’s expected, as this is standard procedure,” he added.

Furthermore, he highlighted that the confirmation of Paul Atkins as the SEC’s new chair is still pending, noting that this ongoing political process is likely affecting decision timelines. However, Seyffart remained optimistic, stating, “This doesn’t change our (relatively high) odds of approval. Also note that the final deadlines aren’t until October.” His remarks suggest that while delays may frustrate some, they do not indicate a shift in regulatory sentiment toward these ETFs.

Wider Implications for Crypto ETFs

Echoing Seyffart’s sentiments, fellow Bloomberg ETF analyst Eric Balchunas also weighed in, emphasizing that “everything [is] delayed,” including ETFs that involve Ethereum staking and in-kind redemptions. The SEC’s cautious approach reflects its broader regulatory stance on cryptocurrency-related financial products, as it continues to evaluate their market impact and investor protections.

These procedural delays are not new. In fact, on February 28, the SEC had previously extended its consideration period for Cboe Exchange’s request to list options tied to Ethereum ETFs. This move followed a surge in altcoin ETF applications after former SEC Chair Gary Gensler’s resignation on January 20.

Regulatory Shifts Following Gensler’s Departure

Gensler’s tenure at the SEC was marked by what many in the cryptocurrency industry perceived as an aggressive regulatory stance. Between 2021 and his departure in early 2024, the SEC launched over 100 cryptocurrency-related regulatory actions, creating widespread friction between the commission and crypto businesses.

Since his exit, however, several cases against crypto firms have been dropped. Notably, crypto exchange Gemini saw its legal troubles subside on February 26, followed by crypto trading firm Cumberland DRW, whose case was dismissed on March 4. These developments suggest a potential shift in regulatory attitudes under new leadership.

Acting SEC Chairman Mark Uyeda has also signaled a move in a different direction. Recently, he proposed abandoning elements of a rule change that would have extended regulatory oversight of alternative trading systems to encompass cryptocurrency firms. Such proposals indicate that the SEC’s approach to crypto regulation may be evolving under its interim leadership.

A Waiting Game for Approval

While delays in SEC decision-making can be frustrating, experts consistently emphasize that these extensions follow standard regulatory procedures rather than signaling an impending rejection. With final deadlines not expected until October, the industry still holds a strong chance of seeing ETF approvals in the coming months.

As the confirmation process for Paul Atkins unfolds, and as regulators continue to assess the role of cryptocurrency ETFs in traditional financial markets, stakeholders remain watchful. For now, the message from analysts remains clear: patience is required, and there’s no reason to assume that the SEC’s cautious approach will ultimately derail the approval of these long-awaited crypto ETFs.