<img src="https://cryptoslate.com/wp-content/uploads/2024/01/ethereum-wallstreet.jpg” />
TD Cowen's Washington Research Group predicted that ethereum spot ETFs will not gain approval this year, according to Kitco in bitcoin-etfs-saw-479-million-outflows-last-week-td-cowen-says-ether-etf”>January 29.
The US Securities and Exchange Commission (SEC) is due to decide soon on proposed rule changes that would allow ethereum spot ETFs to be listed and traded on stock exchanges. TD Cowen argued that approval is unlikely, stating:
“(The SEC) may eventually reject the rule change, which will lead to a new application or litigation…Either will take another year or two to come to fruition.”
In that case, a potential timely approval of the ethereum ETF is unlikely until late 2025 or early 2026, the research group said.
The SEC must make a decision on VanEck's ethereum spot ETF application by May 23, but is not required to approve the fund. The securities agency is expected to make a decision on similar applications at the same time.
Other sources are divided on whether a May approval is likely. A Polymarket prediction market ethereum-etf-approved-by-may-31?tid=1706564650180″>suggests There is a 47% chance of approval, while a JP Morgan executive has suggested a 50% chance of approval. Bloomberg ETF analyst James Seyffart is a little more optimistic and has predicted a 60% chance of approval.
Political factors are at play
TD Cowen said his low approval expectations are based on partisan attitudes toward cryptocurrencies. The research group wrote:
“This is a political call. We believe there is no advantage for SEC Chairman Gary Gensler to approve an ethereum spot ETF given how upset progressive Democrats were about the agency's approval of a bitcoin spot ETF. earlier this month.”
TD Cowen noted that SEC Chairman Gary Gensler, a Democrat, needs the support of progressives to advance his agenda or potentially obtain a different government position should US President Joe Biden win a second term. He suggested that approving a spot ETF would involve an “unnecessary struggle” and that Gensler would likely be “in no rush” to approve such a fund.
Democrats generally opposed the previous approval of spot bitcoin ETFs, as TD Cowen noted. Within the SEC, two Democratic commissioners voted against the approval of a bitcoin spot ETF, while two Republicans voted in favor of approval. Gensler voted for approval despite his membership in the Democratic Party and his broader concerns about cryptocurrencies.
Outside the SEC, Democratic Senator Elizabeth Warren expressed her complaints about the decision to approve a spot bitcoin ETF on January 12.
