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Ethereum ETF Approval Odds Questioned by Analyst

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Fri, 26/01/2024 - 18:11
Ethereum ETF Approval Odds Questioned by Analyst
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The deadline for the U.S. Securities and Exchange Commission (SEC) to approve a spot ether (ETH) exchange-traded fund (ETF) is just months away, and analysts are divided on the odds of the regulator greenlighting such a product.  

Legal experts Jake Chervinsky and Scott Johnsson have cast doubt on the likelihood of a positive outcome.

"Many people seem to assume that because the SEC gave up fighting against the spot BTC ETF, they’ll do the same on ETH. I’m not sure," Chervinsky said on the X social media platform.  

Regulatory hurdles 

Scott Johnsson cautioned investors to prepare for the possibility of the ETF's disapproval. 

According to Johnsson, the SEC might require consistent correlation across the entire 2.5-year sample period to satisfy the requirements of section 6(b)(5) of the Securities Exchange Act. 

Related

This stance, while potentially frustrating for proponents of the ETF, is not seen as unreasonable or capricious by Johnsson. 

He also argues that approval is more likely in the following year, making an appeal less attractive and portraying the SEC in a constructive light. "And more importantly, why would someone appeal such a tough argument when they know with high certainty it will be approved before their appeal is decided," he wrote. 

This perspective was further discussed on X, with users debating the arbitrariness of the 2.5-year period and the prospects of an eventual approval.

Earlier this week, the SEC postponed its decision on the approval of a spot Bitcoin ETF until March. 

Diverging views on approval odds

Contrasting opinions have emerged regarding the approval odds for the spot ether ETF. A recent report by JPMorgan gave the ETF no more than a 50% chance of approval by May, citing ongoing lawsuits against crypto exchanges offering staking services for proof-of-stake blockchains, including Ethereum. 

This legal uncertainty adds complexity to the SEC’s decision-making process. On the other hand, Bloomberg Intelligence Senior ETF analyst Eric Balchunas initially estimated a 70% chance of approval this year, with his colleague James Seyffart offering a slightly more cautious outlook of 60-65%. 

Seyffart acknowledges the existence of strong arguments both for and against the ETF's approval, indicating a less confident stance compared to previous Bitcoin ETF approvals.

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