Coinbase Analyst Predicts Inevitable Approval of Ethereum ETFs

The approval of spot exchange-traded funds (ETFs) based on Ethereum by the U.S. Securities and Exchange Commission (SEC) is merely a matter of time, according to David Han, an analyst at the cryptocurrency exchange Coinbase. He expressed this view in a recent report.

“While there is uncertainty regarding the timely approval of [ETH-ETF], given the apparent silence of the SEC and issuers, we believe that the existence of spot ETH-ETFs in the U.S. is only a matter of time,” he wrote.

According to Han, the primary rationale used for approving Bitcoin ETFs is applicable to instruments based on the second-largest cryptocurrency by market capitalization.

However, Han expressed doubts about the imminent approval of an Ethereum ETF with a staking feature. On May 10, ARK Invest and 21Shares removed the clause on coin locking from their application for an ETF based on the second-largest cryptocurrency.

The analyst estimated the probability of spot Ethereum ETFs being approved by the end of May at 30-40%.

“We believe there is room for surprise in this matter. […] Even if there is a rejection by the first deadline of May 23, 2024, a court process could overturn this decision. It is also worth noting that not all applications for spot ETH-ETFs necessarily have to be approved simultaneously,” Han explained.

Previously, lawyer Scott Jonsson stated that the SEC is examining grounds for rejecting applications for spot Ethereum ETFs. In his view, one reason could be the asset being classified as a security.

In April, experts from Standard Chartered joined the camp of skeptics doubting the approval of spot ETH-ETFs by May 23. Analysts cited the lack of constructive dialogue between the regulator and issuers.

In May, the SEC postponed its decision on a similar product from Invesco and Galaxy. On April 23, the Commission extended the review period for Franklin Templeton’s spot Ethereum ETF with a deadline until June 11. Prior to this, the agency extended the review period for a similar application from BlackRock.

In May, the deadline for proposals from VanEck and Grayscale will arrive.

Grayscale Investments withdrew its application to create a futures-based ETF on Ethereum. According to its CEO Michael Sonnenshein, the company will focus its efforts on converting ETHE into a spot exchange-traded fund.