JPMorgan doesn’t see more than 50% chance of spot Ethereum ETF approval by May

JPMorgan isn’t betting big that the Securities and Exchange Commission will clear spot Ethereum ETH -0.13% exchange-traded funds in May — its first deadline to approve such funds.

“In our opinion, for the SEC to approve spot Ethereum ETFs in May, it would need to classify Ethereum as a commodity (similar to bitcoin) rather than a security,” JPMorgan’s Nikolaos Panigirtzoglou told The Block. “This is far from given, and I wouldn’t put more than a 50% chance to the SEC classifying Ethereum as a commodity before May.”

Earlier this week, the SEC approved spot bitcoin ETFs after over a decade of rejections. Traders are now betting that spot Ethereum ETFs could be next in line to get the green light as the price of ether has surged nearly 20% in the last seven days compared to bitcoin’s gain of 2.5% during the same period.

But, according to Panigirtzoglou, the SEC is “still signaling that it continues to view all other cryptocurrencies outside bitcoin as securities.”

Last year, JPMorgan said U.S. lawmakers could potentially put ether into a new “other category” to avoid classifying it as a security.

Staking protocols

Last year, SEC Chair Gary Gensler reiterated that tokens using staking protocols, such as Ethereum’s ETH token, could be considered securities under U.S. law. During a nearly five-hour hearing with lawmakers last year, Gensler refused to say whether ETH was a security. And earlier this week, while approving spot bitcoin ETFs, Gensler said that decision “should in no way signal the Commission’s willingness to approve listing standards for crypto asset securities.”

Some analysts, including Bloomberg Intelligence’s James Seyffart, have been more optimistic than JPMorgan that spot ETH ETFs will get approved.

The SEC had to finally approve spot bitcoin ETFs in part because it had already approved bitcoin futures ETFs, and a federal court ruled that the SEC must review its rejection of Grayscale’s attempt to convert the Grayscale Bitcoin Trust into an ETF.

Several firms, including BlackRock and Fidelity, have recently filed for spot ETH ETFs.

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