TD Cowen’s Washington Research Group has stated that the recent approval of Ethereum exchange-traded funds (ETFs) has paved the way for more investment products in the crypto industry. While the speed of approval surprised some, the research group saw it as an expected outcome following the approval of Bitcoin ETFs earlier this year. Jaret Seiberg, a member of TD Cowen’s team, noted that the approval of Ethereum ETFs came earlier than anticipated but was predictable after the Securities and Exchange Commission (SEC) gave the green light to crypto futures ETFs. Seiberg further suggested that in the next year, we could see investment offerings that include a “basket of crypto tokens,” which could include Bitcoin and other cryptocurrencies.
However, the approval of Ethereum ETFs does not signify a broader change in the SEC’s stance on cryptocurrencies. SEC Chair Gary Gensler, who is known for his critical view of the crypto industry, released a statement criticizing the passage of crypto legislation that could potentially reduce the agency’s authority. Gensler pointed out the industry’s history of failures, frauds, and bankruptcies, attributing them not to a lack of regulations, but to many players in the crypto industry disregarding existing rules. His statement was made before the Financial Innovation and Technology for the 21st Century Act (FIT 21) was passed in the U.S. House of Representatives. Despite potential challenges, TD Cowen predicts that the SEC will maintain its Democratic majority until 2026 and continue to litigate against crypto trading platforms that trade tokens deemed unregistered securities.
Industry experts suggest that the recent approval of spot ETH ETFs confirms Ether’s status as a non-security. Bloomberg ETF analyst James Seyffart stated that the approval of these commodity-based trust shares implies that the SEC explicitly recognizes Ether as not being a security. Seyffart also suggested that this recognition could extend to other tokens, solidifying their classification as commodities. Digital asset lawyer Justin Browder echoed Seyffart’s sentiment, stating that if Ether ETFs receive S-1 approval, which is the final requirement for them to begin trading, it would settle the debate once and for all and affirm that ETH is not a security. Adam Cochran, a partner at venture capital firm Cinneamhain Ventures, took the argument further, suggesting that this line of thinking could be applied to tokens of other projects as well.
On May 23, the SEC officially approved 19b-4 applications from various companies, including VanEck, BlackRock, Fidelity, Grayscale, Franklin Templeton, ARK 21Shares, Invesco Galaxy, and Bitwise, to issue spot Ether ETFs. It is worth noting that several ETF issuers removed staking from their final amendments. Seyffart predicts that S-1 approvals could be granted in a couple of weeks, although the process may take longer, typically up to five months. However, fellow Bloomberg ETF analyst Eric Balchunas believes that a mid-June launch is certainly possible.
