TD Cowen expects a spot Ethereum ETF to arrive before 2025 or 2026.

According to Kitco on January 29, TD Cowen’s Washington Research Group predicted that a spot Ethereum ETF would not win approval this year.

The U.S. Securities and Exchange Commission (SEC) should soon decide on proposed rule changes that would allow spot Ethereum ETFs to be listed and traded on stock exchanges. TD Cowen argued that approval was unlikely:

“(The SEC) could ultimately reject the rule change, which would lead to new filings or litigation. Either way, it would take another year or two to proceed.”

In that case, approval of an Ethereum ETF is unlikely to occur until late 2025 or early 2026, the research group said.

The SEC must make a decision on VanEck’s application for a spot Ethereum ETF by May 23, but is not required to approve the fund. Securities firms are expected to make decisions on similar applications at the same time.

Other sources are divided about the possibility of approval in May. One Polymarket prediction market suggested a 47% chance of approval, while a JP Morgan executive suggested a 50% chance of approval. Bloomberg ETF analyst James Seyffart was slightly more optimistic, predicting a 60% chance of approval.

Political factors are at play

TD Cowen said low approval expectations are based on partisan attitudes toward cryptocurrencies. The research group wrote:

“This is a political demand. We believe SEC Chairman Gary Gensler is unlikely to approve a spot Ethereum ETF given how angry progressive Democrats are about approving a spot Bitcoin ETF. earlier this month.”

TD Cowen noted that SEC Chairman Gary Gensler, a Democrat, needs the support of progressives to advance his agenda or potentially win a different government position if U.S. President Joe Biden wins a second term. Approving a spot ETF would involve “unnecessary fighting,” and Gensler suggested there would likely be “no rush” to approve such funds.

As TD Cowen observed, Democrats were largely opposed to early approval of a spot Bitcoin ETF. Within the SEC, two Democratic commissioners voted against approving a spot Bitcoin ETF, while two Republicans voted in favor of approving it. Gensler is a Democrat and voted in favor of approval despite widespread concerns about cryptocurrencies.

Outside the SEC, Democratic Senator Elizabeth Warren expressed displeasure with the decision to approve a spot Bitcoin ETF on January 12th.