According to CoinDesk, the Securities and Exchange Commission’s (SEC) deadline for the Ark 21Shares spot ether (ETH) exchange-traded fund (ETF) application is May 23, and JPMorgan estimates the probability of approval by then is no more than 50%. Since the bitcoin (BTC) ETF narrative gained traction last year, traders have viewed ether as the next likely candidate for spot ETF approval in the U.S. This sentiment is reflected in the Grayscale Ethereum Trust's (ETHE) discount to net asset value (NAV), which has contracted since the summer and hovered around 12% over the last two months, according to JPMorgan.
Some argue that the SEC's decision not to mention ETH in its lawsuit against crypto exchanges for violating securities law indicates the regulator will likely classify the cryptocurrency as a commodity in the coming months, a necessary condition for spot ETF approval. Others contend that the approval of ether futures-based ETFs in September last year implies ether is already considered a commodity. However, JPMorgan analysts led by Nikolaos Panigirtzoglou are skeptical, stating that the chances of a spot ether ETF approval by May this year are 'not higher than 50%'.
Ether's recent surge followed the approval of a spot bitcoin ETF, as traders bet on the likelihood of an ether ETF approval. If approved, it would be the first time professional investors in the U.S. can gain exposure to the blockchain’s token without having to own it. However, Ethereum's transition from proof-of-work to proof-of-stake consensus mechanism in 2022 and the negative impact on the blockchain’s decentralization make ether more similar to other altcoins classified as securities by the SEC. The ongoing lawsuits by the SEC against crypto exchanges offering staking services for proof-of-stake blockchains, including Ethereum, make a spot ether ETF approval more challenging until these lawsuits are resolved.
