Cryptocurrency exchange Coinbase believes the odds of the SEC approving ethereum spot ETFs by the end of the month are between 30% and 40%.
in a 15 th of May In the report, Coinbase institutional research analyst David Han stated that the main factor that led the SEC to approve spot bitcoin ETFs — the correlation between CME futures product and spot exchange rates — It could also lead to approving ethereum spot ETFs.
Han said there is “room for upside surprise with this decision,” both in prediction markets and the fact that Grayscale ethereum Trust is trading at a 24% discount.
He admitted that the SEC's silence has caused “uncertainty” and that eth ETFs that specifically aim to engage in eth staking are unlikely to gain approval.
Politics a possible factor
Coinbase is bullish in part because of the key role of cryptocurrencies in American politics. Han said the SEC will spend political capital denying spot eth ETFs, a strategy Coinbase believes is uncertain.
Bankless founder Ryan Sean Adams echoed that sentiment, stating that approval expectations were low until Democrats “learned that their anti-crypto SEC chair could cause them to lose an election.”
None of the individuals described any specific political events. However, recent polls show that cryptocurrency owners slightly favor Trump over Biden. Uniswap founder Hayden Adams has described cryptocurrencies as a Republican rallying point in contrast to the Biden administration's regulatory approach.
SEC Chairman Gensler and two other voting commissioners are Democrats, while two other voting commissioners are Republicans, giving the agency both leadership and a Democratic majority.
Approval could be delayed
Han noted that the SEC does not need to approve all ad hoc requests at once.
Each eth ETF spot application has a different decision deadline. The SEC must decide on VanEck's application first by May 23, but can decide on BlackRock and Fidelity's applications until August.
Han also argued that a rejection on May 23 could lead to legal action reversing the decision.
In January, SEC Chairman Gary Gensler cited a Grayscale lawsuit over the proposed GBTC conversion as a factor in the agency's approval of spot bitcoin ETFs. However, Grayscale has not stated that it will file a similar lawsuit regarding eth spot ETFs.
Bloomberg's Balchunas responds
Bloomberg analyst Eric Balchunas commented on Coinbase's bullish and contrarian stance, writing:
“It's like a way to get out of the money purchase option to give yourself notoriety if chance happens. It's okay if they make a mistake. Risk-free public relations movement.”
He concluded that his and his colleagues' predictions are “bolder and riskier to reputation than… contrary (last-minute random) calls.”
Balchunas posted a low estimate on May 14, when he said the chances of eth spot ETF approvals are “slim to none.” In late March, he predicted “very pessimistic” approval odds of 25%.
Crowdsourced estimates provide similarly low probabilities. At the time of writing, Polymarket's approval odds were at 10%, down from 16% at the time of Coinbase's report.
