JPMorgan Sets Odds Below 50% for May Approval on Ethereum ETF

• JPMorgan suggests there is a less than 50% chance of the Securities and Exchange Commission (SEC) approving a spot ether exchange-traded fund (ETF) by May 23.
• The investment bank cites ongoing lawsuits against crypto exchanges offering staking services for proof-of-stake blockchains, including Ethereum, as a significant hurdle to the approval process.

Cryptocurrency enthusiasts eyeing the approval of a spot ether (ETH) exchange-traded fund (ETF) by May 23 might need to temper their optimism. According to JPMorgan, the probability of the Securities and Exchange Commission (SEC) greenlighting the ETF by the May deadline is no more than 50%.

Lawsuits Cast a Shadow on Ether ETF Approval

JPMorgan’s analysts, led by Nikolaos Panigirtzoglou, highlight that lawsuits against crypto exchanges offering staking services for proof-of-stake blockchains, including Ethereum, pose a significant hurdle to the approval of a spot ether ETF until these legal cases are resolved.

The crypto market had been buzzing with anticipation, viewing ether as the next contender for a spot ETF approval in the U.S., following the fervor around Bitcoin ETF narratives. Traders have been closely monitoring the discount to net asset value (NAV) for the Grayscale Ethereum Trust (ETHE), which has narrowed to around 12% over the last two months, signaling growing investor interest.

While some optimists point to the SEC’s decision not to mention ETH in its recent lawsuits against crypto exchanges for securities law violations as a positive signal, JPMorgan remains skeptical. The analysts argue that the SEC’s classification of ether as a commodity is unlikely to occur as early as May, and they place the odds of spot ether ETF approval before the deadline at no higher than 50%.

The approval of ether futures-based ETFs in September of the previous year has fueled debates among market participants. Some contend that this approval implies ether’s classification as a commodity, a necessary condition for a spot ETF. However, JPMorgan’s cautious stance underscores the complexities of the regulatory landscape.

Ether’s recent surge, propelled by the approval of a spot bitcoin ETF, has heightened expectations for an ether ETF approval. If successful, this would mark the first instance where U.S. professional investors could gain exposure to Ethereum’s token without direct ownership.

The report from JPMorgan also draws attention to Ethereum’s transition from proof-of-work to proof-of-stake consensus in 2022, aligning it more closely with altcoins outside of Bitcoin. This shift, coupled with ongoing SEC lawsuits against crypto exchanges providing staking services for proof-of-stake blockchains, adds further layers of complexity to the regulatory considerations surrounding ether ETF approval.

While the crypto community eagerly awaits the SEC’s decision, JPMorgan’s analysis suggests that the road to approval for a spot ether ETF may be more challenging than some anticipate, with legal uncertainties casting a shadow over the process.