TD Cowen expects spot Ethereum ETF no earlier than 2025 or 2026

TD Cowen’s Washington Research Group predicted that spot Ethereum ETFs will not gain approval this year, according to Kitco on Jan. 29.

The U.S. Securities and Exchange Commission (SEC) must soon decide on proposed rule changes that would allow spot Ethereum ETFs to be listed and traded on securities exchanges. TD Cowen argued that approval is unlikely, stating:

“[The SEC] 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.”

In that event, any possible spot Ethereum ETF approval is unlikely to occur until late 2025 or early 2026, the research group said.

The SEC must reach a decision on VanEck’s spot Ethereum ETF application by May 23 but is not required to approve the fund. The securities agency is expected to reach a decision on similar applications at the same time.

Other sources are divided on whether a May approval is likely. One Polymarket prediction market suggests 47% odds of approval, while one JP Morgan executive has suggested a 50% chance of approval. Bloomberg ETF analyst James Seyffart is slightly more optimistic and has predicted a 60% chance of approval.

Political factors are at play

TD Cowen said that its low approval expectations are based on partisan attitudes toward cryptocurrency. The research group wrote:

“This is a political call. We believe there is no upside for SEC Chair Gary Gensler to approve a spot Ethereum ETF given how upset progressive Democrats were over the agency’s approval of a spot bitcoin ETF earlier this month.”

TD Cowen noted that SEC Chair Gary Gensler, a Democrat, needs support from progressives in order to advance his agenda or potentially obtain a different government position in the event that U.S. President Joe Biden wins a second term. It suggested that approving a spot ETF would involve a “needless fight” and that Gensler is likely in “no hurry” to approve such a fund.

Democrats broadly opposed the earlier approval of spot Bitcoin ETFs, as TD Cowen observed. Within the SEC, two Democratic commissioners voted against the approval of a spot Bitcoin ETF while two Republicans voted in favor of approval. Gensler voted in favor of approval in spite of his Democratic party membership and his broader concerns about cryptocurrency.

Outside of the SEC, Democratic Senator Elizabeth Warren expressed complaints about the decision to approve a spot Bitcoin ETF on Jan. 12.