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SEC Unlikely to Approve Spot Ethereum ETF in Near Future, Predicts TD Cowen

In a recent development, TD Cowen, a prominent investment bank, has cast doubt on the possibility of the U.S. Securities and Exchange Commission (SEC) greenlighting spot Ethereum exchange-traded funds (ETFs) in the near future. The investment bank suggests that although the wait may not extend to the 26-month mark, approval is likely to be delayed until after the upcoming U.S. presidential election.

The initial deadline for the SEC’s decision on approving spot Ethereum ETFs is in May, sparking significant anticipation within the crypto community. However, TD Cowen’s Washington Research Group, led by Jaret Seiberg, believes that the regulatory body is inclined to gain more experience from Bitcoin ETFs before venturing into approving similar products for other cryptocurrencies.

“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,” noted the research group in a recent statement. “The wait might not be as long as 26 months, but it likely would be after the election.”

This cautionary stance from TD Cowen comes on the heels of the SEC’s historic approval of spot Bitcoin ETFs earlier this week. The green light followed over a decade of rejections and 26 months after approving Bitcoin futures ETFs in October 2021. The timing of the SEC’s decision on Bitcoin ETFs has led to speculation about the potential approval of spot Ethereum ETFs, given the recent surge in the price of Ether.

While some market analysts are optimistic about the prospect of spot Ethereum ETFs getting the regulatory nod, others, like those at JPMorgan, remain cautious. Nikolaos Panigirtzoglou from JPMorgan highlighted a key consideration for the SEC, stating, “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. 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.”

Despite the uncertainties, several major financial firms, including BlackRock and Fidelity, have recently filed for spot Ethereum ETFs. This indicates the industry’s eagerness to capitalize on the growing interest and demand for crypto investment products. As the crypto market continues to evolve, market participants will keenly watch for further developments and the SEC’s stance on expanding ETF offerings beyond Bitcoin.

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