JPMorgan Analysts Opine that Robinhood’s SEC Notice is Unlikely to Impact Approvals for Ethereum ETFs
JPMorgan analysts, led by Nikolaos Panigirtzoglou, have released a report arguing that the recent Wells notice issued to Robinhood Crypto by the U.S. SEC for alleged unregistered security offerings is unlikely to impede the potential approval of spot Ether ETFs.
The Wells notice sent to Robinhood Crypto, which provides trading services for various cryptocurrencies including Bitcoin and Ether, indicated that the SEC may take enforcement action against the company for violations of securities regulations.
The Wells notice is seen as part of the SEC’s ongoing efforts to assert its strict stance on considering most cryptocurrencies as securities, with the exception of Bitcoin and Ether. However, despite this, SEC Chairman Gensler has not provided a clear explanation as to why Ether is considered a security.
The JPMorgan analysts believe that the Wells notice will not hinder the approval of spot Ether ETFs. They suggest that the SEC’s approval process for these ETFs may follow a similar path to that of Bitcoin, where futures-based ETFs have already been approved. The analysts argue that if the SEC rejects the approval of spot Ether ETFs, it could face legal challenges similar to those seen with Bitcoin spot ETFs.
It is worth noting that the Wells notice sent to Robinhood does not imply that the SEC considers Ether to be a security. According to Panigirtzoglou, the status of Ethereum will be determined through legislation and court proceedings, and there may ultimately be a category that falls between a commodity and a security for Ether.
The JPMorgan report suggests that the potential rejection of a spot Ether ETF this month may not disappoint the markets, as it is widely expected. The current discount to the net asset value of the Grayscale Ethereum Trust is seen as an indicator that the market is not currently interested in Ethereum ETFs. Additionally, the withdrawal of Grayscale’s Ether futures ETF application indicates the company’s preference for focusing on converting its existing Ethereum trust into a spot Ethereum ETF. The SEC is expected to reject the approval of spot Ethereum ETFs, pushing the deadline for Grayscale to await the final decision on the VanEck spot Ethereum application to May 23rd.
In conclusion, JPMorgan analysts believe that the Wells notice issued to Robinhood Crypto by the SEC will not have a significant impact on the trajectory of spot Ether ETFs.