The SEC has postponed its decision on Invesco and Galaxy spot Ethereum ETFs. Why does the watchdog keep rolling back the decision instead of rushing to respond?
Firstly, the SEC wants to take a closer look at all the details of the proposal and related issues. The approval of a spot crypto ETF will set an important precedent, so the regulator is committed to taking a balanced approach to this decision.
Secondly, the cryptocurrency market remains quite unstable and volatile. Recent events surrounding FTX, Celsius and other players have flagged the risks for investors. The SEC likely wants to get it right and make sure investors are adequately protected.
Thirdly, the commission has been dragging out the process, allowing more time for debate and for interested parties to come forward with their pros and cons. The longer the issue is under review, the more balanced the decision will be.
Finally, postponing the decision allows the SEC to gain time and look at further steps by regulators (CFTC, OFAC) and legislators regarding crypto assets.
Overall, the SEC aims to study all the risks and consequences as thoroughly as possible before approving such an instrument. The regulator is treading cautiously and does not want to rush into what may well turn out to be a game changer for the entire industry.