SEC unlikely to approve spot Ethereum ETF ‘any time soon’: TD Cowen

The U.S. Securities and Exchange Commission is not expected to approve it in kind. Ethereum ETH

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According to investment bank TD Cowen, investors will be investing in exchange-traded funds (ETFs) in the near future. The initial deadline for approving such funds is May.

“We believe the SEC will want to gain experience, so we do not expect the agency to approve ETPs for other cryptocurrency tokens. Bitcoin BTC

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TD Cowen Washington Research Group, led by Jaret Seiberg, wrote in a note earlier this week that “the waiting time may not be as long as 26 months, but will likely be longer” before accepting Ethereum or other crypto token ETPs. election.”

The SEC approved a spot Bitcoin ETF earlier this week, after more than a decade of rejection, and 26 months after approving a Bitcoin futures ETF in October 2021. The 2024 US presidential election is scheduled to be held in November.

Following the approval of the spot Bitcoin ETF, traders are betting that a spot Ethereum ETF could be next to receive approval as the price of Ethereum has surged over the past week. While some analysts are optimistic that a spot ETH ETF will be approved, others, such as JPMorgan, are not betting big. “If the SEC is to approve an Ethereum spot ETF in May, we believe it will have to classify Ethereum as a commodity rather than a security (similar to Bitcoin),” JPMorgan’s Nikolaos Panigirtzoglou told The Block this week. “This is far from a given, and I wouldn’t put it above a 50% chance that the SEC will classify Ethereum as a commodity before May.”

Several large companies, including BlackRock and Fidelity, have recently applied for spot ETH ETFs.

‘Gensler acts without haste’

While approving the spot Bitcoin ETF, SEC Chairman Gary Gensler said the federal court had no choice but to approve the fund because the SEC lost a legal challenge brought by Grayscale Investments. “We today approved the listing and trading of certain spot Bitcoin ETP shares, but we do not endorse or endorse Bitcoin,” Gensler said at the time. “Most cryptocurrency assets are investment contracts, so we do not approve or endorse Bitcoin.” “I don’t,” he added. “Subject to federal securities laws.”

TD Cowen sees the spot Bitcoin ETF approval as consistent with Gensler’s claim that it is “taking a go-slow approach, modeling itself on how the agency established rules for the asset-backed securities (ABS) market.” said. Additionally, the approval does not accelerate the timeline for cryptocurrency market structure legislation, the bank said.

“This does not change our expectations about the structure of the cryptocurrency market. We believe that Congress should enact legislation to establish a framework for how tokens will be regulated, what types of disclosures will be required, and what agencies will be responsible for protecting investors.”TD Cowen said. “It is our view that Gensler views enforcement actions and litigation as aiding that process by narrowing down the issues Congress must address.”

Gensler’s term ends in June 2026, according to TD Cowen, which could maintain a Democratic majority on the SEC until then. “This is another reason we believe Gensler is in no rush to act,” the bank said, adding that he has time to file more lawsuits and wait for more court rulings rather than rush legislative action.

“It also allows the United States to learn from other jurisdictions before enacting regulatory regimes that are difficult to change once adopted,” the bank concluded.

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