US spot Ethereum ETF approval by May is a coin toss, JPMorgan says

What are the odds the Securities and Exchange Commission will greenlight US spot Ethereum exchange-traded funds by May?

Not “higher than 50%,” investment banking giant JPMorgan wrote in a note on Thursday — much lower than predicted by market watchers and online bettors.

Ethereum ETF deadline approaches

The investment bank’s assessment comes in advance of the SEC deadline to approve Ark Invest’s spot Ethereum ETF by May 23, and hinges on several factors.

On the approval side is the fact that the Grayscale Ethereum Trust discount against Ethereum has declined since last summer and remained at about 12% since early December, the researchers said.

A second reason is that future Ethereum ETFs were approved in September, which “by itself implies that Ethereum is deemed to be a commodity,” analysts wrote.

A third reason to be bullish is the notion that the SEC may soon categorise Ethereum as a commodity, JPMorgan wrote.

That view has been bolstered by the SEC not citing Ethereum in its lawsuits against crypto exchanges Binance and Coinbase, the analysts wrote.

Analysts at UK-based bank Standard Chartered made a similar point in a research report earlier in January.

Still, the authors behind the JPMorgan report were “sceptical that the SEC will classify Ethereum as a commodity as soon as May.”

The report said: “If anything, with Ethereum having transitioned from proof-of-work to proof-of-stake and the negative impact this transition had on Ethereum decentralisation, Ethereum looks more similar to other cryptocurrencies outside Bitcoin, which are deemed securities by the SEC.”

The SEC’s string of lawsuits against the likes of Coinbase for its Ethereum staking services “make a spot Ethereum ETF approval more challenging, at least until these lawsuits are resolved,” the analysts wrote.

JPMorgan’s 50% odds of a spot Ethereum ETF approval are significantly lower than the 70% chance Bloomberg Intelligence analyst and crypto’s go-to ETF pundit Eric Balchunas recently offered.

Online bettors had placed similar odds of an approval by May 31 on prediction market Polymarket earlier in January, though they have dropped from 82% on January 10 to 56% today.

Crypto market movers

• Bitcoin is up 0.2% to below $41,300 since Wednesday.
• Ethereum is up 0.7% to $2,490.

What we’re reading

• Texas cold snap threatens 15% of global Bitcoin mining activity — DL News
• Bitcoin ETFs Surpass Silver ETFs In Assets Under Management — Milk Road
• Donald Trump Promises to Never Allow CBDCs if Elected President — Unchained
• EU’s new money laundering deal poised to burden crypto more than traditional finance — DL News
• Tether takes fire as UN says stablecoin is ‘preferred choice’ for $17b in Asian crime rackets — DL News

Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at sebastian@dlnews.com.