Ethereum ETF Has Only a 50% Chance of Approval

According to analysis from experts at JP Morgan, the chances of the Securities and Exchange Commission (SEC) approving a spot Ethereum exchange-traded fund (ETF) proposal next month are not high. Analysts say, based on the SEC’s recent actions against Ethereum-related entities, that approval is unlikely.

SEC’s cautious attitude

In a note published on Thursday, the bank pointed out that the SEC’s cautious attitude, coupled with news of an investigation into companies linked to the Ethereum Foundation, points to the possibility of passing the ETF proposal. Ethereum on-site in May was just under 50%. Previously, there was news that the Ethereum Foundation – a non-profit organization that supports the platform – was being investigated by authorities, although the SEC has not confirmed this information.

The most controversial thing I said on stage at @blockworksDAS today:

Spot Ethereum ETFs will gather more assets if they launch in December vs. if they launch in May. TradFi needs more time to digest the bitcoin ETFs.

— Matt Hougan (@Matt_Hougan) March 19, 2024

JP Morgan’s report also mentioned legal possibilities if the SEC’s decision is unfavorable. They argue that failure to approve could lead to legal action on the part of the applicant and predict that the SEC will likely not be successful in this case, similar to previous cases involving Grayscale and Ripple. They believe that, eventually, the SEC will have to approve spot Ethereum ETFs, although this will not happen in May.

In a more positive assessment last month, analysts at JP Morgan expressed the view that Ethereum may not be considered a security thanks to the project’s increasing decentralization, but could be decentralized class as a commodity. However, recently they expressed doubts about the possibility that the SEC will classify Ethereum as a commodity in the coming weeks.

Investors will be disappointed

Yeah @JSeyff and I will have formal odds out soon but tbh and no offense to the eth ppl but this is such small potatoes vs spot bitcoin ETFs. It's like the opening act coming on after the headliner. Using GenX bands it's like Sister Hazel trying to follow Nirvana.

— Eric Balchunas (@EricBalchunas) March 2, 2024

Not only JP Morgan, analysts at Bloomberg Intelligence are also not optimistic about these ETF products being licensed next month. James Butterfill, head of research at CoinShares, also said that investors may face disappointment as the approval deadline approaches.

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On the other hand, several major investment firms such as BlackRock, Fidelity, and Grayscale are working to issue Ethereum ETFs. These products, if approved, would expand investor access to the second largest digital asset in the market without having to purchase and store them themselves.

On January 10, the SEC approved 10 Bitcoin (BTC) ETFs, and they began trading the next day, achieving spectacular success ever since.