Don’t expect a spot Ethereum exchange-traded fund (ETF) to receive regulatory approval this year, according to analysts at TD Cowen. In a research note published Monday, the firm argues an Ether spot ETF is still a distant prospect that could take until late 2025 or 2026 to materialize.
Citing “no upside for SEC Chair Gary Gensler” in greenlighting such a product currently, the analysts make the case that an Ethereum spot ETF is more of a political issue than anything else. With progressive Democrats already upset over recent Bitcoin spot ETF approvals, Gensler risks further backlash that could threaten his policy agenda and position in a likely Biden second term, they contend.
Additionally, TD Cowen points to the SEC’s traditionally gradual, conservative approach around cryptocurrencies. Following the landmark bitcoin ETF authorizations, Gensler was quick to caution that they should not indicate any broad embrace of crypto assets by the Commission.
Instead, the agency seems intent on taking incremental steps before entertaining an Ether spot ETF. Getting more experience overseeing the new Bitcoin funds appears to be the priority first.
Other experts remain more optimistic on the prospect timeline, albeit with uncertainty baked in. The likes of Goldman Sachs, Deutsche Bank, and Bloomberg Intelligence’s Eric Balchunas forecast or expect spot Ethereum ETF approvals ranging from a 70% chance by May to the highest probability by that same month.
Much depends on whether the SEC ultimately deems Ether – the second largest crypto asset behind Bitcoin – a security or commodity. That critical determination feeds into what type of ETFs can hold it.
For now, Wall Street will be left guessing if and when a spot Ether fund gets a regulatory nod. But the barrier of election-year politics makes it highly unlikely, claims TD Cowen.
