The U.S. Securities and Exchange Commission (SEC) has postponed the approval of multiple spot ETFs for the following reasons:

• Market volatility and compliance issues: SEC Chairman Gary Gensler has stated that before approving spot ETFs, it is essential to ensure investor protection and market transparency. The cryptocurrency market is highly volatile, and regulation is still immature; the SEC needs to continuously assess the associated risks.

• Cautious regulatory stance: The SEC has maintained a cautious approach towards the approval of cryptocurrency spot ETFs. For example, it was not until January 2024 that the SEC officially approved the first batch of Bitcoin spot ETFs, nearly ten years after the Winklevoss brothers first submitted their Bitcoin ETF application in 2013. The SEC will be more cautious with ETF applications for emerging assets.

• Concerns about market manipulation and fraud: Some underlying spot markets for cryptocurrencies are considered to have situations where fraud and manipulation are difficult to detect, which raises concerns for the SEC when approving related spot ETFs. For instance, Grayscale CEO Michael Sonnenshein has pointed out that the SEC believes the Bitcoin spot market lacks the capability to detect fraud and manipulation.

• Uncertainty of legal status: The legal status of some crypto assets remains unclear, as the SEC has classified assets like Solana and XRP as potential securities, increasing the legal uncertainty surrounding the approval of related ETFs, leading to delays in the approval process.