SEC bypassed commission vote in approving Ethereum ETFs

The Securities and Exchange Commission’s (SEC) Trading and Markets Division has approved several spot Ethereum exchange-traded funds (ETFs) using delegated authority, rather than a vote by the full commission.

The approval covers 19b-4 filings from major financial institutions, including BlackRock, Fidelity, Grayscale, Bitwise, VanEck, Ark, Invesco Galaxy, and Franklin Templeton. The official order stated, “For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.”

This procedural difference marks a departure from the SEC’s earlier decision-making process for spot Bitcoin ETFs, which involved a vote by all five commissioners, including SEC Chair Gary Gensler. The Bitcoin ETF approvals in January saw a split vote, with Gensler and Republican Commissioners Hester Peirce and Mark Uyeda in favor, while Democratic Commissioners Jaime Lizárraga and Carolina Crenshaw opposed.

Bloomberg ETF analyst James Seyffart noted that using delegated authority is a standard practice within the SEC. “Making decisions via delegated authority is the norm. This is how things are typically done. If the SEC required an official vote for every decision or every document — it’d be insane,” Seyffart commented on X. He added that while it would have been interesting to see where political lines were drawn, the process itself was not unusual.

A high-ranking source at one of the issuers involved called the use of delegated authority an “interesting detail,” speculating that it might be related to recent political developments.

Despite the approval of the 19b-4 forms, the ether ETFs still require the SEC’s S-1 registration statements to go effective before trading can commence. This additional step means that the debut of these ETFs on exchanges could take weeks.

The crypto industry has reacted positively to the news, with many seeing it as a “historic move” that could pave the way for further regulatory approvals in the future. Market analysts are closely watching the SEC’s next steps, particularly how quickly the S-1 registrations are processed.