According to investment bank TD Cowen, the US Securities and Exchange Commission (SEC) is unlikely to approve spot Ethereum ETFs in the near future. The bank’s Washington Research Group believes that the SEC will want to gain experience from Bitcoin ETPs before approving an Ethereum or any other crypto token ETP. While the initial deadline for approval is in May, TD Cowen speculates that approval may not come until after the 2024 US presidential election.
SEC Chairman Gary Gensler’s recent approval of spot Bitcoin ETFs was prompted by a federal court decision that left the agency no choice. Gensler maintains that the majority of cryptocurrencies are investment contracts and fall under federal securities laws.
TD Cowen suggests that the approval of spot Bitcoin ETFs aligns with Gensler’s cautious approach, comparing it to how the agency establishes rules for the asset-backed securities market. The bank believes that legislation will be necessary for creating a regulatory framework for tokens, including regulations, disclosures, and investor protection.
Gensler’s term ends in June 2026, which means that a Democratic majority in the SEC could be maintained until then. TD Cowen argues that this gives the US time to observe and learn from other countries before enacting a regulatory regime that would be challenging to modify once established.