In a tweet, Fox business reporter Eleanor Terrett reports a “resounding no” from SEC sources, signaling “some internal resistance” to approving Ethereum spot ETFs. She also mentions SEC Commissioner Esther Pierce, known for her pro-cryptocurrency stance, who advocates for a simpler decision-making process. It is known that Pierce criticized the dependence on court decisions in approving ETFs. Despite the SEC’s resistance, Terrett highlights optimism among asset managers such as BlackRock, whose ETF approval track record has given them hope of approving an Ethereum ETF by this summer. Blackrock is confident, citing the soft launch of Bitcoin spots as a potential catalyst for the approval of an Ethereum spot ETF. Terrett expects further examination of the SEC’s position in the coming months, largely through interaction with S-1 registration forms.
Expectations for Ethereum spot ETFs vary. Bloomberg ETF analyst Eric Balchunas sees a 70% chance of approval in May, while JP Morgan’s Nikolaos Panigirtzoglou is less optimistic, forecasting a 50% chance. JP Morgan analysts led by Nikolaos Panigirtzoglou remain cautious, estimating the likelihood of approval to be no higher than 50%. Regulatory and judicial considerations and uncertainty surrounding the classification of Ethereum as a commodity or security add to their skepticism. The SEC’s recent delay in making a decision on Fidelity’s Ethereum spot ETF until March 5, 2024 extends the evaluation period. A final decision on the Ethereum spot ETF is expected between late January and August 2024. The approval of Ethereum spot ETFs remains shrouded in uncertainty due to conflicting signals from the SEC, differing expectations from expert data, and ongoing regulatory uncertainty.
The ongoing SEC proceedings against Ripple and the lack of an approved XRP futures ETF product also seriously hurt the chances of the spot XRP ETF being approved. CoinShares Head of Product Townsend Lansing explained that the XRP ETF will not be possible unless the SEC is forced by court pressure or voluntarily agrees to recognize that XRP is not a security. In July, a judge in the SEC’s lawsuit against Ripple ruled that XRP as a token is not a security, but is one when sold to institutional buyers. The fight between them continues, and the trial in this case is scheduled for April 23. Van Buren Capital general partner Scott Johnsson says he also considers the likelihood “very remote” and will likely seek new leadership from the SEC. Others, such as CoinShares research analyst Max Shannon, noted that it took more than a decade for the spot Bitcoin ETF to be approved.
Earlier this month, Bloomberg ETF analyst James Seyffarth expressed little confidence in the imminent release of the XRP ETF. In an interview with Thinking Crypto’s Tony Edward on January 11, Seyffart said the ETF was a “remote possibility” and didn’t think it would happen this year given the ongoing SEC case against Ripple. Seyffart also noted that, unlike Bitcoin and Ethereum, there are currently no approved XRP futures ETFs in the United States. On this point, Johnsson argues that even if a financial exchange like the CME listed XRP futures tomorrow, the SEC would need years of high correlation between the XRP futures market and the spot market before approving a spot ETF to ensure that joint oversight agreements are “sufficient to detect fraud and manipulation in the spot market” – as happened with Bitcoin spot funds.
However, analyst pessimism hasn’t sapped hope from some of XRP’s more avid fans in recent weeks. Though those hopes were largely dashed after Fox Business’ Charles Gasparino reported that BlackRock is not planning a spot XRP ETF, citing people with “direct knowledge of the matter.” Meanwhile, Franklin Templeton’s head of digital assets Sandy Kaul hinted in an interview on January 11 that they would be offering clients more options for investing in cryptocurrency, and she expected “more applications from us at some point,” which also encouraged hopes for other applications for cryptocurrency ETFs. Whether an XRP fund appears or not, the industry is focused on potential spot Ether ETF approvals, with Bloomberg ETF analyst Eric Balchunas estimating the chances of approval in May at 70%.
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