According to investment bank TD Cowen, it is unlikely that the US Securities and Exchange Commission (SEC) will approve spot Ethereum ETFs in the near future. The bank’s Washington Research Group, led by Jaret Seiberg, has stated that the SEC is likely to want to gain experience from Bitcoin Exchange Traded Products (ETPs) before considering approval for an Ethereum or other cryptocurrency token ETP.
While the initial deadline for approval of such funds is in May, TD Cowen suggests that approval may not occur until after the 2024 US presidential election. It’s worth noting that the SEC’s approval of spot Bitcoin ETFs came after more than a decade of initial filings and 26 months after it granted approval for Bitcoin futures ETFs in October 2021.
SEC Chairman Gary Gensler has explained that the approval of spot Bitcoin ETFs was influenced by a federal court ruling, which essentially compelled the SEC to approve these funds because the agency lost a lawsuit filed against it by Grayscale Investments. Gensler maintains the perspective that “the vast majority of cryptocurrencies are investment contracts and are therefore subject to federal securities laws.”
TD Cowen views the approval of the spot Bitcoin ETF as in line with SEC Chairman Gary Gensler’s approach, which appears to be a deliberate and cautious one, akin to how the agency establishes rules for the asset-backed securities (ABS) market. According to the bank, Congress will likely need to pass legislation to create a comprehensive framework for regulating tokens, defining necessary disclosures, and designating the responsible agency for investor protections.
With Gensler’s term set to end in June 2026, and the possibility of maintaining a Democratic majority in the SEC until then, TD Cowen suggests that the United States has the opportunity to observe and learn from regulatory approaches implemented in other countries. This period of observation allows for a more informed decision-making process before enacting a regulatory framework that could be challenging to modify once it’s in place.
