SEC likely to approve spot Ethereum ETFs on May 23: Standard Chartered Bank

The Securities and Exchange Commission is expected to follow the strategy employed in approving spot bitcoin exchange-traded funds for spot Ethereum ETH +2.83% ETFs, starting with rejections and ultimately granting approval on the initial final deadline on May 23, according to Standard Chartered Bank.

"We expect pending applications for ETH U.S. spot ETFs to be approved on May 23, the final deadline for the first of the ETFs under consideration — the equivalent date to Jan. 10 for BTC ETFs," Geoffrey Kendrick, head of Standard Chartered Bank's forex and digital assets research, wrote in a report on Tuesday. "If ETH prices perform similarly to how BTC prices performed in the lead-up to BTC ETF approval, ETH could trade as high as $4,000 by then."

Kendrick foresees the approval of spot Ethereum ETFs primarily on the grounds that the SEC has not categorized ether as a security in its legal actions against crypto companies, and the listing of ETH as a regulated futures contract on the Chicago Mercantile Exchange adds weight to this expectation.

"Grayscale also has an ETH trust that it wants to turn into an ETF, so a denial of that application would likely lead to another appeal by Grayscale," he said, adding that "we see no fundamental reason for the SEC to view ETH differently than the CME already does."

 

Consistently optimistic

 

Kendrick generally holds an optimistic outlook on crypto, especially regarding price trends. Earlier this month, before spot bitcoin ETFs were approved, he said those funds are expected to attract inflows of $50-100 billion this year, and as a result, the bitcoin price could rise to $100,000 by the end of the year and $200000 by the end of 2025.

The $100,000 price prediction "still looks achievable," Kendrick said in today's report, adding that expected steady inflows in spot bitcoin ETFs will gradually raise the bitcoin price.

Bitcoin price declined after spot bitcoin ETF approvals, mainly due to outflows from Grayscale Bitcoin Trust (GBTC), but has since bounced back and is currently trading at around $43,540.

Kendrick said ether is less susceptible to the post-approval selling that bitcoin saw. "The key reason for this is that the Grayscale Ethereum Trust has a smaller share of total ETH market cap than GBTC did before approval of BTC ETFs; and within that, FTX holdings are even lower," he noted.

 

Ethereum ETFs that include staking yields to be approved later

 

On May 23, Kendrick only expects simple Ethereum ETFs that replicate ether price movements to get approved, while ETFs that include staking yield rewards may be introduced later, he said.

"Both types exist in Europe; AETH [21Shares Ethereum Staking ETP] is the largest ETF that includes staking yield rewards. However, given that AETH has higher fees than ETH, staking rewards are offset by fees," he said.

Kendrick also commented on Ethereum's upcoming Dencun or Proto-Danksharding upgrade and said it would benefit the ether price. "Overall, this upgrade should see more value captured within the ETH ecosystem as lower Layer 2 fees make ETH more competitive, and slower staking should keep staking rewards higher for longer. Both of these are positive for ETH prices," he concluded.

As a whole, crypto experts have been both optimistic and pessimistic that a spot ether ETF approval is on the horizon.