TD Cowen’s Washington Research Group predicted that spot Ethereum ETFs will not gain approval this year, Kitco said on January 29.
The U.S. Securities and Exchange Commission (SEC) must soon rule on proposed rule changes that would allow spot Ethereum ETFs to be listed and traded on stock exchanges. TD Cowen argued that approval is unlikely, stating:
“[The SEC] may ultimately reject the rule change, which will lead to a new filing or a lawsuit… It will take another year or two for it to play out.”
In that case, a potential spot Ethereum ETF approval is unlikely to happen until late 2025 or early 2026, the research group said.
The SEC must make a decision on VanEck’s spot Ethereum ETF application by May 23, but does not have to approve the fund. It is expected that the securities agency will decide on similar applications at the same time.
Other sources are divided on whether an approval in May is likely. One Polymarket forecast market suggests a 47% chance of approval, while a JP Morgan executive suggests a 50% chance of approval. Bloomberg ETF analyst James Seyffart is slightly more optimistic, predicting a 60% chance of approval.
There are political factors at play
TD Cowen said the low approval expectations are based on a partisan attitude toward cryptocurrency. The research group wrote:
“This is a political call. We believe there are no benefits for SEC Chairman Gary Gensler to approve a spot Ethereum ETF, given how angry progressive Democrats were over the agency’s approval of a spot bitcoin ETF earlier this month.”
TD Cowen noted that SEC Chairman Gary Gensler, a Democrat, needs support from progressives to advance his agenda or potentially gain a different government position in the event that U.S. President Joe Biden wins a second term. It suggested that approving a spot ETF would require an “unnecessary struggle” and that Gensler is likely “in no rush” to approve such a fund.
Democrats were broadly against the earlier approval of spot Bitcoin ETFs, as TD Cowen noted. Within the SEC, two Democratic commissioners voted against approving a spot Bitcoin ETF, while two Republicans voted in favor of approving it. Gensler voted to approve despite his Democratic party affiliation and broader concerns about cryptocurrency.
Outside the SEC, Democratic Senator Elizabeth Warren raised complaints about the decision to approve a spot Bitcoin ETF on January 12.