JPMorgan remains optimistic about the SEC’s approval of Ethereum ETFs, even amid potential regulatory challenges and litigation. Decentralization and less concentration on the Ethereum network may improve the chances of ETH not being classified as a security. Bloomberg’s Eric Balchunas has reduced his optimism regarding an approval of Ethereum ETFs in May, highlighting the high uncertainty.
JPMorgan has expressed confidence that the United States Securities and Exchange Commission (SEC) will give the green light to Ethereum exchange-traded funds (ETFs).
Although at the beginning of this year it did not give more than a 50% chance of approval by May, optimism persists in the company.
Ethereum ETF Approval Odds Improve
Nikolaos Panigirtzoglou, managing director and global markets strategist at JPMorgan, said a delay beyond May could trigger a litigation process similar to previous legal battles involving Grayscale. He anticipates that the SEC could suffer a defeat in such litigation.
According to BlockBeats, despite JPMorgan’s previous prediction that the chances of an Ethereum spot ETF being approved within the initial review period in May were less than 50%, the company remains optimistic that the US Securities and Exchange Commission (SEC) eventually approves Ethereum spot. ETF. “If an Ethereum ETF is not approved in May, we assume there will be a litigation process after May,” Panigirtzoglou stated.
Panigirtzoglou further commented that “We think the most likely scenario is that the SEC will eventually lose in this lawsuit (similar to last year’s legal battle between Grayscale and Ripple), meaning that the SEC will eventually approve the Ethereum spot ETF (but probably not before May this year).”
Regarding the requests that await a response by the end of May, Panigirtzoglou maintains his expectations at 50% despite the doubts and denials expressed by certain analysts and researchers. However, this new reading comes a day after the JPMorgan researcher and his team spoke out on the legal definition for Ethereum, claiming that it may not qualify as a security as long as it reduces the participation of US companies in staking for the block processing.
This optimistic outlook persists even amid reports that the SEC is examining the Ethereum Foundation and efforts to classify Ethereum as a security. Nevertheless, the easing of centralization concerns, particularly Lido Finance’s declining market share, improves ETH’s prospects of bypassing the security designation.
More on JPMorgan’s Confidence in Ethereum Spot ETFs
The JPMorgan team highlights network decentralization as a critical factor, drawing on the SEC’s Hinman filings. Panigirtzoglou explained the following:
“Lido’s share of staked ETH has decreased further, from around a third a year ago to around a quarter today. This should reduce concerns about concentration on the Ethereum network, thus increasing the possibility that Ethereum avoids being designated as security in the future.”
The sentiment is not universally accepted, though. Bloomberg Senior ETF Analyst Eric Balchunas noted a decline in his optimism. It adjusted its Ethereum ETF approval odds to 25% from the initial 70% in January.
The SEC’s current request for comment on several Ethereum ETF applications, from heavyweights like Fidelity. Additionally, Grayscale and Bitwise add a layer of anticipation to the narrative. These developments are being closely watched as they could significantly influence the regulatory landscape for cryptocurrencies in the United States.
Although the SEC officially approved Bitcoin ETFs, it seems that an Ethereum ETF has a much more complicated path due to the operational characteristics of its network. The issue appears to be with its consensus algorithm, which derives passive profits for those who support block processing by pledging funds.
By Audy Castaneda
