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SEC unlikely to approve Ethereum ETF in near future, say TD Cowen and JP Morgan

In this post:

  • TD Cowen and JP Morgan expect the SEC to delay Ethereum ETF approval, first focusing on the Bitcoin experience.
  • TD Cowen estimates a potential 26-month wait for an Ethereum ETF, possibly after the U.S. elections.
  • JP Morgan sees Ethereum ETF hinging on commodity classification, which will unlikely happen soon.

In a recent report by TD Cowen, a prominent American multinational investment bank, it has been projected that the U.S. Securities and Exchange Commission (SEC) will unlikely approve an Ethereum Exchange-Traded Fund (ETF) anytime soon. 

The bank’s Washington Research Group suggests that the SEC will prioritize gaining experience with Bitcoin Exchange-Traded Products (ETPs) before considering the approval of Ethereum or other crypto token ETPs. 

This assessment aligns with JP Morgan’s cautious outlook, which also believes that Ethereum ETF approval hinges on its classification as a commodity rather than a security. This change might not occur in the immediate future.

Delay expected in Ethereum ETF approval

The TD Cowen Washington Research Group anticipates a significant delay before the SEC approves an Ethereum ETF. The bank’s report highlights the need for the SEC to familiarize itself with Bitcoin ETPs before venturing into Ethereum or other crypto tokens. 

According to their analysis, it could take up to 26 months before the SEC is prepared to approve an Ethereum ETF. Furthermore, they suggest that any such approval will likely be postponed until after the upcoming elections in the United States.

TD Cowen’s report emphasizes the importance of the SEC’s experience with Bitcoin ETPs as a prerequisite for considering Ethereum and other crypto token ETPs. This cautious approach stems from the recent approval of spot Bitcoin ETFs, marking a significant milestone for the cryptocurrency industry. 

These approved ETFs include Blackrock’s iShares Bitcoin Trust, Grayscale Bitcoin Trust, Fidelity Wise Origin Bitcoin Trust, and Bitwise Bitcoin ETF. The SEC decided to approve these Bitcoin-focused ETFs after years of delay and multiple rejections.

JP Morgan shares a similar Outlook

TD Cowen is not the only financial institution expressing skepticism about the swift approval of an Ethereum ETF. JP Morgan, another leading player in the financial industry, shares a similar viewpoint. According to Nikolaos Panigirtzoglou, a Managing Director at JP Morgan, for the SEC to consider approving spot Ethereum ETFs, Ethereum would need to be classified as a commodity, akin to Bitcoin, rather than a security. However, he doesn’t foresee such a reclassification happening in the near future.

The delay in approving an Ethereum ETF has significant implications for the cryptocurrency market. While Bitcoin has been the focus of the SEC’s regulatory efforts and is now gaining recognition through ETFs, Ethereum remains uncertain as the second-largest cryptocurrency by market capitalization. The absence of an Ethereum ETF limits investors’ access to this digital asset through traditional financial channels, potentially affecting its adoption and growth.

Investor Caution and Uncertainty

Investors in cryptocurrency are urged to exercise caution and remain patient regarding the SEC’s stance on Ethereum ETFs. The regulatory landscape for cryptocurrencies continues to evolve, and the approval process for new financial products may take time. Investors must stay informed about the latest developments and regulatory updates to make informed decisions regarding cryptocurrency investments.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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