With 11 spot Bitcoin ETFs approved and trading underway, the broader cryptocurrency market is now wondering whether spot Bitcoin ETFs are valid. Ethereum ETH
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When will ETFs follow?
There is definitely a demand for one. Brett Tejpaul, head of Coinbase Institutional, told The Block in a recent interview that there is customer interest and enthusiasm for a spot Ethereum ETF, and that many leaders will see value in that kind of product coming to market. .
But the problem is not particularly simple. The SEC has doubts about whether Ethereum is a security that would interfere with ETFs. It also reluctantly approved a spot Bitcoin ETF, with two committee members opposing it. The approval took just one vote, including from SEC Chairman Gary Gensler. He stated that the SEC does not support Bitcoin and that its approval “should not in any way indicate the Commission’s intention to approve listing standards for crypto asset securities.”
These and other issues have left some observers wondering whether approval for a spot Ethereum ETF will come in the near future. While banks in general have made it clear that such approval is unlikely, cryptocurrency experts have expressed cautious optimism.
Bullish on Spot Ethereum ETF
Those hoping to see a spot Ethereum ETF approved this year point to similarities with how the spot Bitcoin ETF was promoted.
“We anticipate approval of a spot Ethereum ETF in May, with an estimated probability of 75%. This optimistic outlook is based on Grayscale’s appeals court victory and the subsequent approval of an Ethereum futures ETF, which, collectively, will Approval of the Eum ETF is just a matter of time,” said Matt Kunke, research analyst at GSR, a cryptocurrency market-making firm.
Kunke added that there will inevitably be an appeal if the SEC rejects the current application for a spot Ethereum ETF in May. If this happens, he believes the SEC will take the path of least resistance by approving the product while remaining skeptical about other cryptocurrencies.
Philippe Bekhazi, founder and CEO of institutional cryptocurrency trading platform XBTO, echoed this sentiment.
“I strongly believe that a spot Ethereum ETF will be approved this year,” he said. “Bitcoin and Ethereum are both CME-listed and regulated futures and will likely be considered fairly equivalent in the eyes of the SEC. Additionally, if market conditions remain strong, additional pressure will be applied to ensure institutional access to those assets. “Approval is certain. It’s not a matter of when, but when.”
Bloomberg Intelligence senior ETF analyst Eric Balchunas previously gave a 70% chance of an Ethereum ETF being approved this year. When asked for comment, his colleague James Seyffart offered a slightly more cautious assessment.
“I would say there are two very clear bearish and bullish cases for the odds of approval for the Ethereum ETF. We believe the odds of approval are over 50%, but we are not as confident as we are for the Bitcoin ETF. Our odds are probably Here’s what it looks like: It’s about 60 to 65 percent,” Seyffart said.
Bitwise is one of the current spot Bitcoin ETF issuers and currently offers the Ethereum Strategy ETF, which provides exposure to companies based on Ethereum, and an ETF that provides access to Bitcoin and Ethereum futures.
“We believe we have a clear view on an Ethereum ETF. All factors are in our view, including the existence of a large and robust regulated futures market and the existence of an Ethereum futures ETF. Ethereum is more complex than Bitcoin. “However, the timing is uncertain,” said Bitwise CIO Matt Hougan. “It is likely to be approved in 2024, but it is not confirmed.”
Hougan added that he is optimistic about Ethereum in 2024. “We are caught up in the narrative squeeze between the excitement around Bitcoin ETFs and the Phoenix-like rebirth of Solana. But there is potential for ETFs, increased trading activity across L2, and the Dencun upgrade opens up a million mainstream use cases. I think it will be given.”
CF Benchmarks is the index provider used by six spot Bitcoin ETFs. “With the launch of the Bitcoin ETF, prospective issuers of Ethereum ETFs now know the standards they must meet,” said Sui Chung, CEO of CF Benchmarks. In fact, Ether has already met most of its major milestones. About two years after the launch of the first Bitcoin futures ETF, CFTC-regulated liquid futures trading took place on the CME, with an ETF investing in futures launching in the United States. Therefore, it is likely that a spot Ether ETF will be trading by the end of the year.”
pessimistic view
On the other hand, some analysts are skeptical that an Ethereum ETF will emerge anytime soon, given the SEC’s general stance on cryptocurrency ETFs.
“We are less optimistic about the likelihood of Ether ETF approval in 2024,” said Anthony Scaramucci, founder and managing partner of SkyBridge Capital. “The SEC made it clear at the time of its approval of the Bitcoin ETF that it considers most cryptocurrency assets to be investment contracts subject to securities laws, thereby excluding them from ETP structures for single non-security products.”
This view was consistent with analysts at JPMorgan, an authorized participant in three of the spot Bitcoin ETFs.
“If the SEC is to approve a spot Ethereum ETF in May, we believe it will have to classify Ethereum as a commodity rather than a security (similar to Bitcoin),” JPMorgan’s Nikolaos Panigirtzoglou said earlier this month. “This is by no means a given, and I wouldn’t put it above a 50% chance that the SEC will classify Ethereum as a commodity before May.”
Investment bank TD Cowen noted that the SEC may want to observe spot Bitcoin ETFs for some period of time before introducing additional cryptocurrency ETFs.
TD Cowen Washington Research Group does not expect the agency to approve ETPs for other crypto tokens because “we believe the SEC will want to gain experience from Bitcoin ETPs before approving Ethereum or other crypto token ETPs.” “I wrote. , reported The Block, led by Jaret Seiberg. “The wait is likely to be after the election, if not up to 26 months.”
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