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American Investment Bank TD Cowen Says Ethereum ETF Will Be Delayed

Despite the United States Securities and Exchange Commission (SEC) granting approval for Spot Bitcoin ETFs, TD Cowen, a prominent American investment bank and financial service firm, foresees potential delays in the approval process of Ethereum Spot ETFs. 

Ethereum Spot ETF Faces Potential Hold-Up

TD Cowen, an investment bank and financial service division of TD Securities has made a bold forecast, predicting that the US SEC is unlikely to approve Ethereum Spot ETFs before its deadline. Presently, the SEC is obligated to make its final decision on its rejection or acceptance of Ethereum Spot ETF from May 23 to August 7, 2024. 

Earlier on January 10, the SEC officially approved Spot Bitcoin ETFs, triggering expectations that ETH Spot ETFs would follow suit. Several major firms including Ark 21 Shares, VanEck, Fidelity, BlackRock, and Hashdex have submitted applications for a Spot Ethereum ETF. Additionally, the regulatory agency has fixed a new deadline for Grayscale’s Ethereum Spot ETF to January 25. 

TD Cowen’s predictions align with the SEC’s typical cautionary approach towards cryptocurrency-related investment products. The investment bank has disclosed that the regulator may delay ETH Spot ETFs until it accumulates sufficient knowledge and experience from its previously approved Bitcoin Spot ETFs. The bank estimates that while the delay may not take as long as 26 months, it is likely to persist beyond the upcoming elections.

Similarly, Scott Melker, a crypto investor on X (formerly Twitter) has highlighted the possibility of the SEC hesitating to approve Ethereum Spot ETFs. Melker predicted that the SEC would be reluctant to approve Ethereum ETFs without external legal pressures similar to those observed during the approval process of Spot Bitcoin ETFs. 

“Gary Gensler isn’t going to entertain an Ethereum Spot ETF unless the courts force it on him. I very seriously doubt we will see one anytime soon, but would love to be proven wrong,” Melker stated. 

Ethereum price chart from Tradingview.com

Class Before Approval

JP Morgan, an American multinational financial service firm has introduced another layer of complexity in the approval process of Ethereum Spot ETFs. Managing Director at JP Morgan, Nikolaos Panigirtzoglou stated that there was a 50% chance of the US SEC approving these Spot ETFs by its May deadline. 

Panigirtzoglou revealed that the SEC would need to classify ETH as a commodity, similar to Bitcoin before it can officially grant authorization for Spot Ethereum ETFs. 

In contrast, Bloomberg senior analyst, Eric Balchunas is more optimistic on Ethereum Spot ETF approvals. The analyst has disclosed a 70% chance of the SEC approving ETH Spot ETFs. Balchunas said previously that he could not imagine a scenario where the SEC would approve Spot Bitcoin ETFs and reject Ethereum Spot Bitcoin ETFs. 

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Ethereum ETF Race Gets Hotter As SEC Receives 11 Filings In One Week

The United States Securities and Exchange Commission (SEC) has been flooded with many applications for Ethereum (ETH) Exchange-Traded Funds (ETFs) in just one week. The applications currently stand at 12, with the latest addition coming from ProShares, a popular fund manager. 

The platform filed four applications for Ether-based ETFs, including a dual Ether and Bitcoin futures strategy ETF, an Ether Strategy ETF, and a short Ether Strategy ETF. 

Will The SEC Approve An Ethereum Futures ETF?

The recent surge in applications started on the 28th of July this year after Volatility Shares filed its application. Ever since, other asset management companies, including ProShares, Roundhill Financial,  Bitwise, Van Eck, and Grayscale Investment, have filled submissions, with some bringing multiple applications. 

The most recent application, filed on August 3 by ProShares, proposes an equal-weight Bitcoin and Ether ETF to measure the performance of holding long positions in the nearest maturing monthly Ether and Bitcoin contracts. 

According to renowned Financial Expert at Bloomberg Intelligence, James Seyffart, ProShare filed four separate applications with the SEC. Bitwise also submitted three applications, while Grayscale Investments filed two applications. 

However, despite the growing optimism, it remains to be seen if the Securities and Exchange Commission will approve these filings. The SEC has never approved an ETF that tracks Ether Futures contracts, unlike Bitcoin Futures ETFs that have been around since October 2021.

Many market experts have argued that these applications are a mere gamble by these asset management companies, who do not want to miss out on being the first Ethereum ETF in the United States. 

Ethereum (ETH) price chart from Tradingview.com (ETFs)

The likelihood of receiving the SEC’s approval remains slim as the regulatory body has never approved an Ethereum futures ETF filing. Add to the mix the consistent refusal of SEC’s Chair, Gary Gensler, consistent refusal to answer if the agency considers ETH a security. This has further compounded regulatory uncertainty around the network.

If none of the applications before the SEC get denied, the Ether ETFs will launch 75 days from their respective filing dates. Analysts expect the Volatility Shares ETF to lead the charge on 12th October. 

Understanding The Difference Between Futures And Spot ETF Products

The primary difference between futures and spot ETF products lies in the fact that while the former tracks the price of futures contracts, the latter requires the issuers to purchase the underlying assets. Spot ETFs are generally considered more valid since they require the fund manager to purchase and hold underlying assets. 

The current spike in Ether-based applications comes amidst a wave of filings from leading asset management companies, including BlackRock, the world’s largest asset manager, among others. These companies are looking to offer the first spot in Bitcoin ETF in the US. 

Investors and members of the crypto community remain expectant of the outcome of the SEC’s consideration of the applications lying before it. Whatever decision the agency takes is likely to affect the attractiveness and accessibility of crypto investments, especially for larger institutional investors. 

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Ethereum ETFs Heat Up As Filings With SEC Climbs To Six

The latest sign of crypto going mainstream among traditional investors is the race heating up to launch the first exchange-traded fund (ETF) tied to Ethereum futures. In recent weeks, six companies have filed proposals with the Securities and Exchange Commission (SEC) to launch Ethereum futures ETFs. 

The Race To Launch An Ethereum Futures ETF

Cryptocurrency ETFs track the price of the digital currencies they are tied to and they are not a new thing in the crypto industry. Bitcoin futures have gained popularity in recent years and are already being offered by popular investment companies. 

However, with bitcoin futures ETFs now established, it is only natural for the next hot product to be an Ethereum futures ETF. So far, more than 10 Ethereum futures ETFs have been filed in the past, but none have been approved by the SEC.

Volatility Shares Ether Strategy ETF was the first to be filed on July 28. Since then, Bitwise Ethereum Strategy ETF, Roundhill Ether Strategy ETF, VanEck’s Ethereum Strategy ETF, and Proshares Short Ether Strategy ETF have been filed and are awaiting clearance, as reported by Bloomberg Intelligence. 

Now, Grayscale Investments is also looking to join the pack with its new Ethereum Futures ETF filing. After withdrawing its filing earlier due to SEC concerns, the digital currency asset management company is now back with a better application. Bitwise, another crypto index fund manager, also withdrew its previous filing at the same time. 

Ethereum price chart from Tradingview.com (Ethereum ETFs)

According to the filing, the majority of the Grayscale Investments fund’s assets would be placed in Ether futures contracts with “front-month” maturities, which have “the shortest time to maturity.”  The company also intends to diversify into other Ethereum contracts in the coming future. 

Why Ethereum Futures ETFs Are Gaining Traction

The buzz around crypto ETFs was recently ignited by the news of BlackRock and other investment companies filing applications with the SEC for Spot Bitcoin ETFs. However, the SEC is still yet to give the go-ahead, citing failure to meet anti-fraud and investor protection standards in past applications. 

Analysts report that BlackRock’s Bitcoin ETF could unlock $30 trillion worth of wealth. Of course, there’s no guarantee if or when they may get the green light.

For crypto investors and the industry, an Ethereum futures ETF would no doubt be a game changer. If approved, Ethereum futures would become available to investors 75 days after the application date. It would provide an easy, low-cost way for investors of these investment companies to gain exposure to the second-largest cryptocurrency by market cap. 

As for ETH’s spot price, it has been struggling to break above $2,000 this year. At the time of writing, ETH is trading at $1,843.96. But if the filings are approved by the SEC, it may signal the beginning of the next Ethereum bull run.