Global investment bank JPMorgan anticipates that the U.S. Securities and Exchange Commission (SEC) will eventually approve spot ether exchange-traded funds (ETFs). However, the firm pegs the chance of approval in May at 50%, foreseeing a potential litigation process if an ether ETF application is rejected at that time.
JPMorgan on Potential SEC Approval of Spot Ether ETFs
JPMorgan predicts that the U.S. Securities and Exchange Commission (SEC) will eventually approve spot ethereum exchange-traded funds (ETFs). However, Nikolaos Panigirtzoglou, a managing director and global market strategist at JPMorgan, maintains that there is only a 50% chance of the securities regulator approving a spot ether ETF in May.
“If there is no spot ethereum ETF approval in May, then we assume there is going to be a litigation process after May,” Panigirtzoglou told The Block, adding:
We believe that the most likely scenario is that the SEC eventually loses this litigation (similar to what happened with the Grayscale and Ripple legal battles last year), which means that eventually, the SEC will approve spot ethereum ETFs (but not as soon as this May).
This week, the securities regulator began soliciting comments on proposed rule changes for Bitwise Ethereum ETF, Grayscale Ethereum Trust, and Fidelity Ethereum Fund. Blackrock, the world’s largest asset manager, also has an application for a spot ether ETF pending at the SEC.
The securities watchdog approved 11 spot bitcoin ETFs on Jan. 10 following a court ruling in favor of Grayscale Investments, which sought to convert its bitcoin trust (GBTC) into a spot bitcoin ETF, despite the SEC’s initial rejection. SEC Chair Gary Gensler subsequently stated: “We do things according to our authorities and how courts interpret our authorities.”
Several analysts have tempered their expectations for the SEC’s approval of a spot ether ETF by May. Bloomberg senior ETF analyst Eric Balchunas has revised his odds for May approval downward to 25%, from 70% in January. He shared on X last week: “The lack of engagement [from the SEC] seems to be purposeful vs procrastination. No positive signs/intel anywhere you look. Personally hope they do approve it but it just ain’t looking good.” Moreover, JPMorgan said in February that the upcoming major Ethereum upgrade is largely priced in.
Nonetheless, there are still believers in a May spot ether ETF approval, such as Standard Chartered Bank. The bank said in January that ETH could reach $4,000 by the May approval date if it follows a similar trajectory to bitcoin during the crypto’s ETF approval process.
There are also reports that the SEC may be attempting to classify ether as a security. Gensler has so far refrained from stating the classification of ETH. Recently, 48 U.S. lawmakers sent a letter to the SEC chairman urging him to clarify whether ETH is a security or a commodity.