Investment bank TD Cowen has revised its forecast for the approval schedule for an Ethereum spot exchange-traded fund in the United States.
The bank’s previous forecast of approval after the November 2024 election now expects approval to occur in late 2025 or early 2026. This notable change can be attributed to political reasons and SEC Chairman Gary Gensler’s regulatory approach.
Political dynamics and regulatory cautions
TD Cowen suggests the delay in approving a spot Ethereum ETF was a political decision. The bank emphasizes that it is highly unlikely that SEC Chairman Gary Gensler would approve such an ETF. It has drawn criticism from progressive Democrats, especially after the recent approval of a spot Bitcoin ETF.
“This is a political demand,” the bank’s Washington research group, led by Jaret Seiberg, said in a note Monday. “We believe SEC Chairman Gary Gensler is unlikely to approve a spot Ethereum ETF, given how upset progressive Democrats were with the agency’s approval of a spot Bitcoin ETF earlier this month.”
With the upcoming 2024 U.S. election held in November, Gensler is expected to make more cautious decisions as he needs the support of lawmakers to advance his agenda or potentially secure a different government position.
Gensler’s thoughtful approach to encryption
The bank claims Gensler, a Democrat, is in no rush to approve an Ethereum ETF. TD Cowen notes that Gensler favors a cautious and cautious approach to cryptocurrency regulation and wants more experience with the performance of the recently approved spot Bitcoin ETF before approving its Ethereum counterpart.
“(The SEC) could ultimately reject the rule change, which would lead to new filings or litigation, either of which would take another year or two to proceed,” the bank wrote.
TD Cowen’s Washington Research Group predicts that even if Congress fails to enact broader cryptocurrency market structure legislation in 2025, approval of a spot Ethereum ETF could still be delayed until late or early 2025.
The bank’s report highlights the SEC’s ability to easily delay or dismiss ETF applications using standard administrative procedures, suggesting that a final decision could take years longer unless there is significant outside influence or political considerations.