The U.S. Securities and Exchange Commission (SEC) has recently delayed decisions on two crypto-related exchange-traded funds (ETFs) and is seeking public input on a third crypto fund proposal. The affected ETFs include the Canary Pudgy Penguins (PENGU) ETF and the T. Rowe Price Active Crypto ETF. Meanwhile, Grayscale Investments is advocating for the approval of options on its spot Bitcoin ETF, GBTC.
The SEC is extending its review of the proposals to list the Canary PENGU ETF on Cboe BZX and the T. Rowe Price Active Crypto ETF on NYSE Arca. These applications are undergoing the SEC's standard 19b-4 process, which allows the regulator to extend the initial decision window by up to 45 days. The T. Rowe Price Active Crypto ETF is an actively managed fund that aims to outperform the FTSE Crypto US Listed Index. The fund intends to invest in cryptocurrencies such as Bitcoin, ETH, Solana, XRP, Cardano, Avalanche, Litecoin, Polkadot, Dogecoin, HBAR, Bitcoin Cash, Chainlink, Lumen, and Shiba Inu.
The Canary PENGU ETF is unique as it seeks to provide investors exposure to the Solana meme coin PENGU, as well as Pudgy Penguins non-fungible tokens (NFTs). The SEC has extended the decision deadline by another 60 days, setting the new deadline for March 11. If approved, the Canary PENGU ETF would be listed and traded on the Cboe BZX Exchange. The SEC's caution in navigating the complexities of crypto-assets is highlighted by this delay. Similar procedural delays have occurred for other crypto ETFs, like those for Dogecoin and Avalanche.
Concurrently, Grayscale Investments is urging the SEC to approve options on its Grayscale Bitcoin Trust (GBTC). In a letter to the SEC, Grayscale CEO Michael Sonnenshein argued that rejecting options on GBTC would unfairly discriminate against its shareholders, given the regulator's prior approval of options on ETFs tied to Bitcoin futures. Sonnenshein contends that options would facilitate price discovery, assist investors in navigating market conditions, hedging, and generating income. Furthermore, options would bring Bitcoin further into the regulatory framework by allowing additional regulated market participants to trade the products.
The SEC's approach to crypto ETFs reflects a focus on maintaining market integrity and protecting investors. Recent trends indicate a detailed and thorough regulatory approval process for crypto assets, aimed at ensuring robust market practices. While the SEC has approved some crypto-related products, such as Grayscale's Digital Large Cap Fund (GDLC), the agency remains cautious in approving ETFs, especially those with novel or complex structures.
