Election-Related Approval Delay
Earlier this month, TD Cowen Washington Research Group, led by Jaret Seiberg, shared that the SEC’s approval of a spot Ethereum ETF could be delayed until after the November 2024 election. In their note on Monday, they stated, “We do not expect the SEC in 2024 to approve a spot Ethereum ETF.” The bank believes that SEC Chair Gary Gensler has no incentive to approve such an ETF, considering the backlash from progressive Democrats over the recent approval of a spot bitcoin ETF.
Gensler’s Future Role
The bank further noted that in case Gensler decides to pursue a different role, like that of Treasury secretary in the event of President Joe Biden winning a second term, he would still require the support of progressives. Consequently, the bank argued that provoking an unnecessary battle is unwarranted. They stated, “We say needless, as our view remains that Gensler is in no hurry to approve an Ethereum ETF…” The bank believes Gensler would prefer to gain more experience with the performance of the recently approved spot Bitcoin ETFs before considering an Ethereum ETF. This cautious approach aligns with his broader stance on incremental and gradual regulation of cryptocurrencies.
More than half a dozen companies, including BlackRock and Fidelity, have submitted applications for a spot Ethereum ETF. However, the SEC recently announced another postponement in its decision on Grayscale Investments’ proposal for a spot Ethereum ETF, following delays on other applications earlier this month.
TD Cowen emphasized that the SEC has the liberty to carefully scrutinize spot Ethereum ETF applications. The bank stated, “It can eventually reject the rule change, which either will lead to a new application or litigation. Either will take another year or two to play out.”
TD Cowen also mentioned that even if Congress fails to pass broader legislation for the crypto market structure in 2025, there is still a possibility of an approval deadline in late 2025 or early 2026.