By
Chimamanda U. Martha
May 20th, 2024
The JPMorgan analysts believe the US SEC will establish a middle ground between security and commodity for Ethereum, thus leading to imminent approval of spot ETFs.
After Hong Kong regulators approved the listing and trading of several spot Ethereum (ETH) exchange-traded funds (ETFs), pressure is mounting on the United States Securities and Exchange Commission (SEC) to follow the same path. Furthermore, the United States House of Representatives voted in favor of a resolution to reject the SEC’s guidance that deterred banks from handling digital assets on Wednesday.
Although the US President Joe Biden has vowed to veto the bill once it reaches his desk, aspiring presidential candidate, Donald Trump, has promised to uphold crypto assets if elected to office later this year. The demand for digital assets in the United States has seen more than 50 million people invest in the crypto assets industry to date.
JPMorgan Foresees Inevitable Approval of Spot Ethereum ETFs
According to JPMorgan Chase & Co (NYSE: JPM) led by Nikolaos Panigirtzoglou in a report to clients on Wednesday, the recent Wells notice to Robinhood Markets Inc (NASDAQ: HOOD) on its crypto business will unlikely obstruct the potential approval of spot Ether ETFs. Notably, the Robinhood CEO Vlad Tenev ostensibly met with the US SEC 16 times in an attempt to register as a special purpose broker before receiving the Wells notice.
As a result, JPMorgan analysts have indicated that the possibility of spot Ether ETF approval eventually remains high. Although the US SEC may reject the spot Ether ETF by VanEck later this month, the analyst highlighted that the agency will find a middle ground for Ethereum between a security and a commodity.
“In our opinion, it does not look like the Wells notice should pose an obstacle to an eventual approval by the SEC of spot Ethereum
ETFs, although perhaps not as soon as this month. The template is likely to be similar to bitcoin: with futures-based Ethereum ETFs already approved, the SEC (if it denies the approval of spot Ethereum ETFs) is likely to face a legal challenge and eventually lose,” JPMorgan analysts, led by Nikolaos Panigirtzoglou, noted.
As Coinspeaker previously pointed out, the US SEC is already facing a lawsuit for attempting to classify Ethereum as a security. Notably, the US SEC was forced to approve the spot Bitcoin ETFs earlier this year through the court victory of Grayscale Investments.
Meanwhile, Grayscale recently opted to pull out of the race for a futures-based Ethereum ETF application to focus on the spot Ether ETF.
“Grayscale might prefer to focus on its other pending application to convert its existing Ethereum trust into spot Ethereum ETF and prefer to wait for the SEC decision/reasons for rejection by May 23rd (final decision date for VanEck spot Ethereum application) before it decides its next steps,” Panigirtzoglou added.