After the spot bitcoin ETF approvals, traders now bet that spot Ethereum ETFs could be next. However, JPMorgan and other TradFi experts believe there's less than a 50% chance the SEC will approve spot Ethereum ETFs by May, the first deadline for such a decision.
One certainty about ‘crypto natives’ is that they love to search for the next narrative, and regarding potential spot ETFs, ETH is the obvious choice. After the historic approval of a Bitcoin spot ETF on Wednesday, after over a decade of rejections, crypto analysts are now suggesting the spot ETH ETF could be imminent.
However, TradFi experts remain skeptical about a near-term approval for a spot Ethereum ETF, suggesting that the SEC will likely observe the performance of Bitcoin ETPs before considering ETFs for Ethereum or other cryptocurrencies. As TD Cowen wrote in their research note,
“Our expectation is that the agency will not be approving exchange-traded products 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. The wait might not be as long as 26 months, but it likely would be after the election.”
JPMorgan isn’t betting big on the soon ETH ETFs approval as well. As Nikolaos Panigirtzoglou told The Block last week,
"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."
SEC Chair Gary Gensler has consistently stated that tokens using staking protocols, such as Ethereum's ETH token, might be classified as securities under U.S. law. And last week, while approving spot bitcoin ETFs, Gensler highlighted that the decision "should in no way signal the Commission's willingness to approve listing standards for crypto asset securities.
“The vast majority of crypto assets are investment contracts and thus subject to the federal securities laws,” — Gary Gensler, SEC chairman.
“This does not change our expectations for crypto market structure. We believe it will require Congress to enact legislation to establish the framework for how tokens will be regulated, what type of disclosures will be required and which agency will be in charge of investor protections," — a TD Cowen representative said to The Block.
Gensler's term as SEC Chair ends in June 2026, and with the ability to maintain a Democratic majority at the SEC until then, he has nowhere to rush. This gives him ample time to pursue further cases and wait for more court rulings, reducing the need for rushed legislative action.
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