TD Cowen Predicts Approval for Spot Ethereum ETF by 2025-2026

In a strategic move, TD Cowen, the prominent investment bank, has updated its forecast for the approval of a spot Ethereum exchange-traded fund (ETF) in the United States. Originally expected post-November 2024, the bank now projects approval in the latter part of 2025 or early 2026.

This adjustment, according to TD Cowen, results from both political factors and the regulatory approach of SEC Chair Gary Gensler.

Political Considerations Behind the Delay

TD Cowen suggests that the delay in the approval of a spot Ethereum ETF is a calculated political decision. The bank points out that there seems to be little motivation for SEC Chair Gary Gensler to give the green light, especially after the recent approval of a spot Bitcoin ETF, which faced criticism from progressive Democrats.

The Washington Research group at TD Cowen, led by Jaret Seiberg, highlighted in a note on Monday.

“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.”0

Gensler’s Cautious Crypto Approach

As the U.S. gears up for the 2024 elections in November, Gensler is expected to exercise prudence in decision-making, seeking support from parliament members to advance his agenda or potentially secure a different government position. TD Cowen emphasizes that, being a Democrat, Gensler is in no rush to approve an Ethereum ETF.

The bank asserts that Gensler prefers a measured and cautious approach to crypto regulation, desiring more experience with recently approved spot Bitcoin ETFs before giving the nod to an Ethereum counterpart.

“[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”, the bank writes. 

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Extended Timeline

TD Cowen’s Washington Research Group foresees a potential delay in the approval of the spot Ethereum ETF until late 2025 or early 2026, even if Congress fails to enact broader crypto market structure legislation in 2025.

The bank’s report highlights the SEC’s ability to easily delay or dismiss ETF applications using standard administrative procedures, suggesting that final decisions could take several more years unless there’s significant outside influence or political considerations.