According to the head of Coinbase Institutional, Brett Tejpaul, there’s demand for an Ethereum ETF. Speaking with The Block, he said there’s interest in an Ethereum ETF, at least from Coinbase’s clients.
The decision lies with the securities and exchange commission though, and the commission hasn’t been very friendly towards Ethereum. Up to this point, the SEC is yet to define Ethereum as either a security or a commodity, something JP Morgan analysts fear could cause unnecessary delay for any potential ETF approval.
The Case for Optimism
Though there’s much uncertainty around the future of an Ethereum ETF, some analysts have given reasons why they are optimistic about an approval in 2024.
“We anticipate a spot Ethereum ETF approval in May with an estimated 75% likelihood. This optimistic outlook is grounded in Grayscale’s Court of Appeals victory and the subsequent approval of Ethereum Futures ETF, collectively suggesting that the approval of a spot Ethereum ETF is only a matter of time,” said Matt Kunke, research analyst at crypto market making firm GSR.
May has been set as the deadline for decisions on a spot Ethereum ETF. Comparing the situation to that of Grayscale, Kunke added that there will be an appeal if the SEC denies the current applications for spot Ethereum ETFs in May.
He believes that such an appeal will force the SEC to approve the ETF applications, just as was the case with Grayscale.
Another analyst and founder and CEO of institutional crypto trading platform XBTO, Philippe Bekhazi supported this argument, adding that Bitcoin and Ethereum are considered to be very similar.
“I strongly believe that we’ll see the approval of a spot Ethereum ETF this year,” he said. “Bitcoin and Ethereum are both listed and regulated futures on CME, and are likely considered pretty equal in the eyes of the SEC. Additionally, if market conditions remain strong, further pressure will be applied to make the asset accessible to institutions. Approval is definitely a question of when, not a question of if.”
Also commenting on the prospects for an Ethereum ETF, a Bloomberg analyst, James Seyffart expressed a more cautious view.
“I will just say there are two very clear bear and bull cases for Ethereum ETF approval odds. We believe the odds of approval are over 50% but not nearly as confident as we were about the Bitcoin ETFs. I would say our odds are probably around 60-65%,” said Seyffart.
At the same time, one of the current spot Bitcoin ETF issuers, Bitwise, has expressed strong optimism that a spot Ethereum ETF could be approved this year.
“We think there is a clear line of sight to an Ethereum ETF. All the ingredients are there in our view, including the existence of a large and robust regulated futures market and the existence of Ethereum futures ETFs,” said Bitwise CIO Matt Hougan.
The Race for ETFs
It took several years for Bitcoin spot ETFs to be approved, but the analysts are optimistic because Bitcoin has set the pace.
Hopefully, an Ethereum ETF will also help in bringing more institutional investors into crypto as a whole, and could be a great addition if approved.