TD Cowen Sees Slim Chances for Spot Ethereum ETF in 2024

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TD Cowen doesn’t expect a Spot Ethereum ETF will be approved anytime soon, citing “no upside” for SEC Chair Gary Gensler.

Following Bitcoin spot fund approvals, an Ethereum spot ETF is the next expected milestone in crypto markets.

On Monday, analysts led by Jaret Seiberg said they do not expect such an ETF will be approved this year.

“This is a political call,” they said. “We believe there is no upside for SEC Chair Gary Gensler to approve a spot Ethereum ETF given how upset progressive Democrats were over the agency’s approval of a spot bitcoin ETF earlier this month.”

Gensler would require backing from progressive lawmakers to push his agenda forward in the upcoming election year, the analysts added. Their support would be essential if he decides to transition to another position, such as Treasury Secretary, the note said.

“Our view remains that Gensler is in no hurry to approve an Ethereum ETF as he would first like more experience with the performance of the recently approved spot Bitcoin ETFs,” it added.

They expect it might unfold over one or two years,  with a decision in late 2025 or early 2026.

TD Cowen also pointed to Gensler’s typically cautious and gradual approach to crypto regulation.

In a statement following bitcoin ETF approvals, Gensler noted that the decision doesn’t reflect the commission’s views of other crypto assets.

“It should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities,” the Chairman said.

Spot Ethereum ETFs Hang in the Balance

Odds for immediate approval of Ether-based spot ETF applications recently fell after the SEC’s postponement of its decision on applications from Grayscale Investments and BlackRock.

Their approval would offer a more convenient and regulated avenue to invest in Ether, the second-largest crypto by market value. But the SEC’s hesitation shows its careful approach.

One major concern revolves around whether Ether should be categorized as a commodity or a security. This determination has consequences for its suitability as an underlying asset for an ETF.

An ETH ETF is likely up next.

An overview of ETH & Ethereum

Terminology:
•Asset = Ether (ETH)
•Blockchain = Ethereum

History:
•Ethereum was launched in 2015 by a group of developers, led by @VitalikButerin.

Asset Supply:
•ETH supply currently stands at ~120 million.… pic.twitter.com/HAj8VaQZkD

— Erik Smith, CFP® (@eriksmithcfp) January 13, 2024

Most Expect May Approval for Spot Ethereum ETFs

Seven such ETFs currently await approval. Apart from TD Cowen, many other experts are speculating about when the first approval might occur, or whether they will at all.

Goldman Sachs’ digital assets head Mathew McDermott is confident that they will be approved in the coming months. Deutsche Bank estimates that the SEC will make its first decision on such a fund by May 23.

Meanwhile, Bloomberg’s ETF Analyst, Eric Balchunas, projected a 70% likelihood of a spot Ethereum ETF being approved by May.

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