[NEWS] US investment bank TD Cowen predicts Ethereum spot ETF approval will occur "after 2025"

On the 29th, the Washington Research Group, led by Jaret Seiberg of the US investment bank TD Cowen, predicted that an Ethereum (ETH) spot ETF "will not be approved this year, but will be approved after 2025."

The reason given was that "the SEC (US Securities and Exchange Commission) will likely want to gain experience with a Bitcoin spot ETF first. Therefore, we predict that they will not approve other cryptocurrency spot ETFs for the time being."

In addition, it was pointed out that the SEC needs to decide on a rule change proposal to allow an Ethereum spot ETF to be listed and traded on a stock exchange. It also claims that "the SEC is unlikely to approve this at this time."

TD Cowen stated, "It is possible that they will ultimately reject the rule change. In that case, it will lead to a new application or litigation. Either way, it will likely take another 1-2 years for a resolution to be reached." Based on these factors, TD Cowen predicted that the Ethereum spot ETF will be approved "late 2025 to early 2026."

The SEC must make a decision on VanEck's Ethereum spot ETF application by May 23, but analysts are divided on the possibility of approval in May.

A survey by DeFi prediction service Polymarket predicts a 47% chance of approval by May. Some executives at JP Morgan have also expressed the view that "the chances are around 50%." Bloomberg ETF analyst James Seyffart is more optimistic, saying "the chances of approval are 60%."

Some analysts believe that political background is a factor

TD Cowen cites "political issues regarding crypto assets (virtual currencies)" as the reason for the low possibility of approval. "This is a political issue. Earlier this month, the SEC approved a Bitcoin spot ETF, which upset many Democrats. There is no political benefit to SEC Chairman Gary Gensler approving an Ethereum spot ETF," he said.

TD Cowen speculates that Chairman Gensler, who was appointed by a Democratic administration, probably thinks that "political considerations are necessary" to protect his position.

In order to continue working, he needs to prepare two scenarios to gain support from both political parties, taking into account the possibility that either US President Joe Biden or former President Donald Trump wins. At this point, there is a strong view that the US presidential election will be a close race, and Chairman Gensler must think that there is no need to rush the approval of an Ethereum spot ETF in order to explore the movements of both parties.

When the Bitcoin spot ETF was approved, two Democratic members voted against it. On the other hand, two Republican members voted in favor, and Chairman Gensler also voted in favor, taking into account the outcome of the court case regarding the approval of a Bitcoin spot ETF and the strength of public opposition.

Democratic Senator Elizabeth Warren, who can be said to be Chairman Gensler's backer, has expressed dissatisfaction with Bitcoin spot ETFs. Chairman Gensler will need to make a decision on an Ethereum spot ETF while taking this background into consideration.

Reference:The Block
Image: Shutterstock

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