JP Morgan has raised concerns about the Securities and Exchange Commission (SEC) approving more cryptocurrency exchange-traded funds (ETFs), especially those that involve tokens other than Bitcoin (BTC) and Ethereum (ETH).
The investment bank believes ETFs based on cryptocurrencies other than Bitcoin and Ethereum are unlikely to be approved unless there are big changes to how the SEC determines their security status.
Not all analysts agree though, with some saying they believe XRP and Solana ETFs could be approved sometime in 2025.
JPMorgan’s Position On Approving Crypto ETFs
Nikolaos Panigirtzoglou, a managing director and global market strategist at JPMorgan, expressed skepticism regarding the recent SEC approval of Ethereum ETFs, particularly in light of the ongoing discussion surrounding Ethereum’s classification as a security.
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Panigirtzoglou stated that as the SEC classifies most other cryptos as securities, it is unlikely that ETFs related to Solana and Shiba Inu will be approved anytime soon.
”We don’t believe that the SEC would go even further by approving Solana or other token ETFs given the SEC has stronger (relative to Ethereum) opinion that tokens outside bitcoin and Ethereum should be classified as securities,” he explained.
As Panigirtzoglou pointed out, the likelihood of more such products receiving SEC approval depends on US lawmakers enacting legislation that asserts that most cryptos are not securities, which does not have legislative backing.
Legislative Obstacles
The lack of specific legislation categorizing the majority of cryptocurrencies as non-securities poses a notable obstacle to additional SEC endorsements. Panigirtzoglou proposed that enacting such legislation could alter the regulatory environment and facilitate the approval of a wider range of ETFs.
He However recognized the absence of such legislation at present, diminishing the likelihood of the SEC granting ETF approvals for tokens such as Solana in the foreseeable future.
J.P. Morgan’s Perspectives Differ From Those Of Other Banks
Geoffrey Kendrick from Standard Chartered Bank holds an optimistic view, suggesting that Solana and XRP ETFs might receive approval by 2025, despite JP Morgan’s skepticism. This positive outlook stands in contrast to Panigirtzoglou’s cautious perspective.
The analyst added, “In several cases, the core technology is so similar to ETH it would be difficult for the SEC to claim they were securities given the ETH position.”
Similarly, Jaret Seiberg from investment bank TD Cowen, wrote in a note to clients last week that the next thing he expects to see approved is an ETF made up of a “basket of crypto tokens”, possibly including tokens beyond Bitcoin and Ethereum.
On Thursday, May 23, 2024, the SEC approved the 19b-4 forms of eight spot Ethereum ETF applicants, including Grayscale, Bitwise, BlackRock, VanEck, Ark 21Shares, Invesco, Fidelity, and Franklin. This approval was executed in one unified order, with S-1 registrations for these ETFs still pending SEC sign-off. Analysts expect these funds to begin trading in the coming weeks.
Are XRP, and SHIB ETFs Looming?
Concurrently, advancements are being made within the Shiba Inu community towards the development of a dedicated ETF. Shytoshi Kusama, recognized for their contributions to the Shiba Inu ecosystem, recently utilized social media platform X to extend congratulations to Ethereum for its ETF approval, hinting at the potential for a SHIB ETF.
Moreover, a few months back, a petition was filed on change.org urging Grayscale Investments CEO Michael Sonnenshein to consider launching a Shiba Inu-specific ETF. This has come at a time when there is increasing demand for ETFs that track various cryptos, such as Solana and XRP.
Likewise, the ongoing legal battle between SEC and Ripple has garnered significant attention from Ripple (XRP) investors, as it holds immense importance for the future progress of XRP-related financial tools. Nevertheless, the potential establishment of an XRP ETF remains uncertain due to lingering legal concerns. Despite this, Brad Garlinghouse, the CEO of Ripple, maintains a positive outlook on the potential of XRP.
Concurrently, following the endorsement of Ethereum ETFs, discussions regarding the prospects of ETFs for alternative cryptocurrencies like Solana and XRP have emerged. According to a survey conducted by an XRP Ledger validator, 66% of the respondents anticipate the SEC’s approval of an XRP ETF by 2025. This perspective finds reinforcement from Standard Chartered, which foresees the approval of both SOL and XRP ETFs within the same timeframe.
