JPMorgan, a leading global investment bank, anticipates that the U.S. Securities and Exchange Commission (SEC) will ultimately greenlight spot Ethereum exchange-traded funds (ETFs), albeit with a cautionary note regarding the timeline and potential legal hurdles. Nikolaos Panigirtzoglou, a managing director and global market strategist at JPMorgan, suggests a 50% likelihood of SEC approval for a spot ether ETF in May, with the possibility of entering a litigation process should an application face rejection.
The Path to Approval
According to Panigirtzoglou, if the SEC does not approve a spot Ethereum ETF in May, the ensuing legal battle could mirror previous litigations involving Grayscale and Ripple, where the SEC faced setbacks. “We believe that the most likely scenario is that the SEC eventually loses this litigation…which means that eventually, the SEC will approve spot Ethereum ETFs,” he explained, albeit potentially beyond the anticipated May timeline.
Current ETF Applications Under SEC Review
The SEC’s consideration of proposed rule changes for Bitwise Ethereum ETF, Grayscale Ethereum Trust, and Fidelity Ethereum Fund, alongside an application from BlackRock for a spot ether ETF, indicates movement towards broader crypto ETF acceptances. This follows the SEC’s approval of 11 spot bitcoin ETFs in January after a favorable court ruling for Grayscale Investments against the SEC’s initial refusal.
Despite JPMorgan’s optimism, some analysts have moderated their expectations for an imminent approval of a spot ether ETF. Bloomberg’s senior ETF analyst, Eric Balchunas, lowered his odds for a May approval to 25% from an initial 70%, citing a lack of positive indicators from the SEC. Additionally, there’s speculation regarding the SEC’s perspective on Ether’s classification as a security, further complicating the approval process.
The Impact of Ethereum’s Upcoming Upgrade
JPMorgan also noted that the major upcoming Ethereum upgrade is likely factored into current market prices, suggesting that investor anticipation has already influenced the asset’s valuation. This acknowledgment reflects the market’s responsiveness to Ethereum’s technological advancements and regulatory developments.
