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Investment Bank TD Cowen Downplays Likelihood of SEC Approving Spot Ethereum ETFs

The American investment bank TD Cowen rates the chances of the SEC approving spot Ethereum exchange-traded fund (ETF) slim. The New York-headquartered bank considers the wait may extend beyond 26 months and likely post the forthcoming election season. 

TD Cowen, in its recent forecast, indicated that the US Securities and Exchange Commission (SEC) is unlikely to consider approving the spot Ethereum ETF soon. The Jeffrey Solomon-led investment bank believes that the initial deadline for the SEC  to approve such funds is shortly approaching in May. 

TD Cowen revealed via its Washington Research Group, headed by Jaret Siberg that they expect the SEC not to approve crypto exchange-traded products (ETPs) soon. The investment bank noted that the US securities regulator will prioritize gaining experience from the recently approved Bitcoin ETF. 

TD Cowen considers that the investment community would likely wait longer for the SEC to approve and likely to extend after the election season. It further observes that the SEC greenlight for the spot Bitcoin ETFs came this week to end the denials traced back to 2013.

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SEC Unlikely to Expedite Spot Ethereum ETFs Approval

TD Cowen notes that the spot Bitcoin ETFs were approved by the Gary Gensler-led regulator 26 months after the nod granted to the Bitcoin futures ETFs in October 2021. As such, TD Cowen considers the approval of spot Ethereum ETFs would arise later after the 2024 presidential elections scheduled for November. 

TD Cowen observed that traders are projecting and betting on the approval of spot Ethereum ETFs following the greenlight granted to the spot Bitcoin ETFs. The bet stimulates the price pump for the second-ranked Ethereum by market capitalization. 

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TD Cowen observed that a mixed bag of projections is arising today, with several analysts optimistic about spot Ethereum ETF approval. JPMorgan is among analysts who are calm in their betting to rule out the imminent approval of ETH ETFs. 

In its recent opinion, JPMorgan rules out the possibility of SEC approving spot Ethereum ETFs. Its achievement in May would necessitate reclassifying Ethereum as a commodity just like Bitcoin, not security. 

JPMorgan’s analyst Nikolaos Panigirtzoglou indicated that he would not bet over 50% of the chance that the Gensler-led SEC would classify Ethereum as a commodity by May. 

The pessimistic projection by JPMorgan comes at a time when big assets management firms led by Fidelity and BlackRock admitted filing for the spot ETH ETFs. 

The slim chances of approving the spot Ethereum ETFs are informed by the Gensler confession that the securities regulator faced no alternative other than supporting the applications. The chair confirmed a change of perspective towards the spot Bitcoin ETFs arose from the loss against Grayscale Investments. 

Gensler observed that the court ruling directed SEC’s denials without explanation unlawful for rejecting the Bitcoin Trust (GBTC) conversion into the spot Bitcoin ETF. 

SEC Adopting Go-Slow Approach Towards Crypto Legislation

Gensler indicated that those granted greenlight to the listing and trading of several spot Bitcoin exchange-traded products (ETP) shares do not constitute an endorsement by the Commission.

Gensler indicated that the approval does not denounce his view that most digital assets constitute investment contracts, thereby subject to compliance with the provisions of the federal securities laws. 

TD Cowen indicated that it considers the spot Bitcoin ETF approvals to align with the thesis that the Gensler-led SEC is deploying a go-slow approach mirroring its approach to establish guidelines for the asset-backed securities field. 

TD Cowen concluded that the recent approval granted to the spot Bitcoin ETFs will not expedite the regulator’s schedule for widespread crypto market structure legislation. 

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TD Cowen indicated that the approval hardly influences its expectations for the digital assets market structure. The bank stated that the process necessitates Congress’s intervention by enacting legislation that delivers clarity in the framework to regulate tokens. 

TD Cowen considers that the new legislation should outline the disclosure types necessary and the regulatory agency responsible for investor protection.

Gensler-Led SEC to Bring More Lawsuits

TD Cowen considers that Gensler is determined to implement enforcement actions and litigations to narrow the issues necessitating Congress input to address. 

TD Cowen considers that Gensler’s term is ending in June 2026, implying that the SEC would retain a Democratic majority in its commissioners. Such understanding explains that Gensler is not in a rush to act. 

Gensler would leverage the time in his reign to initiate more cases, resulting in court rulings. Doing so is necessary, unlike rushing legislative action. 

TD Cowen considers the delay necessary to allow the US to learn from the approaches deployed by other jurisdictions. The cautious approach will help the US enact a regulatory regime backed by facts that are tough to amend once adopted. 


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Stephen Causby

Stephen Causby is an experienced crypto journalist who writes for Tokenhell. He is passionate for coverage in crypto news, blockchain, DeFi, and NFT.

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