The securities and exchange commission (SEC) approved 11 spot Bitcoin ETFs last week, marking a historic milestone in the crypto industry. This was followed by a lot of optimism on the overall growth of the industry.
There has even been optimism that spot Ethereum ETFs may be the next. However, analysts think the SEC may not be considering an Ethereum ETF anytime soon. Analysts at JP Morgan believe the commission may go beyond May in approving an Ethereum ETF.
They argued that the SEC will have to first classify Ethereum as a non-security to consider approving a spot ETF for it which could take some time.
“In our opinion, for the SEC to approve spot Ethereum ETFs in May, it would need to classify Ethereum as a commodity (similar to bitcoin) rather than a security,” JPMorgan’s Nikolaos Panigirtzoglou told The Block. “This is far from given, and I wouldn’t put more than a 50% chance to the SEC classifying Ethereum as a commodity before May,” he added.
Is Ethereum a Security?
Despite the approval of spot Bitcoin ETFs, SEC chairman Gary Gensler immediately followed with a warning that the approval doesn’t in any way suggest that the SEC approves of Bitcoin, even though it agrees that the top asset is a commodity.
This places Ethereum in a worse position as according to Panigirtzoglou, the SEC is “still signaling that it continues to view all other cryptocurrencies outside bitcoin as securities.”
Meanwhile, Gensler has on several occasions in the past said that Ethereum was a security, because the commission considers any asset with a proof-of-stake consensus mechanism as a security.
He also stated after approving the Bitcoin ETFs that the approval “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities,” referring to other crypto assets apart from Bitcoin.
TD Cowen Weighs in
In a similar manner, analysts from investment bank TD Cowen have expressed pessimism about a spot Ethereum ETF coming soon. Like JP Morgan, the bank expects the SEC to go beyond the May deadline for approving such ETFs.
“Our expectation is that the agency will not be approving ETPs for other crypto tokens any time soon as we believe the SEC will want to gain experience from Bitcoin ETPs before it approves an Ethereum or other crypto token ETP,” wrote TD Cowen Washington Research Group, led by Jaret Seiberg, in a note earlier this week. “The wait might not be as long as 26 months, but it likely would be after the election.”
TD Cowen added that the time it took to approve the Bitcoin ETFs also shows that the SEC is being slow towards allowing the crypto industry to establish as independent. The bank also said there’s still need to proper regulation for the industry to stop suffering under the SEC.
“This does not change our expectations for crypto market structure. We believe it will require Congress to enact legislation to establish the framework for how tokens will be regulated, what type of disclosures will be required and which agency will be in charge of investor protections,” TD Cowen said. “Our view remains that Gensler sees enforcement actions and litigation as aiding that process by narrowing the issues that Congress must resolve,” it added.
