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Robinhood Wells Notice Shouldn’t Deter Eventual Approval of an Ether Spot ETF: JPMorgan

May 8, 2024
  • The legal actions against crypto exchanges appear to be an attempt by the SEC to influence policy makers and legislators, the bank said.
  • If the SEC denies approval of spot ether ETFs it will likely face a legal challenge and lose, the report said.
  • JPMorgan said the lack of approval this month is not a huge disappointment as it was widely expected by the market.
As a researcher with experience in the crypto market, I believe that the SEC’s actions against Robinhood and its ongoing stance on crypto tokens outside of bitcoin and ether being securities are part of an effort to exert influence over U.S. policy makers and legislators regarding crypto regulations. The SEC’s legal actions against crypto exchanges such as Uniswap and Metamask further emphasize this point.According to JPMorgan’s analysis in a recent report, the SEC’s notice to Robinhood should not hinder the future approval of ETH ETFs by the SEC.

On May 4, according to a company filing made public on Monday, the widely-used cryptocurrency trading platform received a preliminary warning from regulatory authorities about possible future enforcement action. This notice is perceived as the SEC’s ongoing effort to clarify that most crypto tokens, besides bitcoin and ether, fall under the classification of securities, according to analysts including Nikolaos Panigirtzoglou.

As a researcher, I’ve come across JPMorgan’s perspective that the Securities and Exchange Commission (SEC)’s legal actions against crypto exchanges might serve as an attempt to shape U.S. policy makers’ and legislators’ opinions regarding cryptocurrency market regulations.

“The Wells Notices served to Uniswap and Metamask underscore the SEC’s intention to oversee a significant portion of the cryptocurrency sector, including decentralized platforms,” the report stated.

The bank pointed out that Robinhood allows users to trade in 13 cryptocurrencies apart from bitcoin and ether. Yesterday, the trading platform reported robust first-quarter earnings, which were significantly boosted by an increase in crypto trading activities. Consequently, the company experienced a notable revenue growth of over 40% compared to the previous year.

The markets are not likely to be greatly displeased by the rejection of the Ethereum-linked spot ETF this month, as this outcome was widely anticipated. This is suggested by the substantial discount between the net asset value (NAV) of the Grayscale Ethereum Trust (ETHE) and its market price.

As a researcher studying the potential approval of an Ethereum-based exchange-traded fund (ETF) by the Securities and Exchange Commission (SEC), I believe the structure of such a product could resemble that of Bitcoin’s ETFs. With futures based Ethereum ETFs already gaining approval, if the SEC denies the request for spot Ethereum ETFs, they might encounter legal opposition and ultimately succumb to the pressure.

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2024-05-09 19:06