Investment Bank Predicts Delay in Ethereum ETF Approval by SEC
An investment bank, TD Cowen, anticipates that the US Securities Commission (SEC) will postpone its decision on approving Ethereum (ETH) exchange-traded funds (ETFs). The bank believes that the SEC will observe the performance of Bitcoin spot ETFs before granting approval for an Ethereum ETF. While TD Cowen does not expect a 26-month delay, it predicts that the SEC will not make a ruling on the applications by the May deadline. Approval may come after the 2024 US elections in November.
The SEC’s Trend of Delaying ETF Decisions
The SEC has a history of delaying decisions on ETF applications, as seen with Bitcoin ETF applications from ARK Invest and 21 Shares. It has also delayed decisions on Ethereum ETF applications by Grayscale Investments and VanEck. Additional disclosures and measures to combat market manipulation have been requirements for approval. The SEC’s request for more information from Fidelity regarding its Ethereum application in November further highlights their cautious approach.
The SEC’s Stance on Ethereum’s Security Status
While the SEC has taken legal action against Kraken for offering an unregistered security through its Ethereum staking service, it has not officially declared Ethereum itself as a security. This lack of an official legal position could potentially delay the approval of an Ethereum ETF. Legal experts believe that the SEC’s lawsuit against Ethereum’s first decentralized organization in 2014 cannot be used as a valid reason to deny an ETF based on Ethereum’s security status.
Hot Take: Likelihood of Ethereum ETF Approval
According to Bloomberg senior ETF analyst Eric Balchunas, there is a 70% chance of an Ethereum ETF approval in May. James Seyffart, another Bloomberg analyst, estimates that the final deadline for these applications could be around May 23, 2024. These predictions suggest a positive outlook for the approval of Ethereum ETFs in the near future.
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