KEY POINTS
- JPMorgan's global market strategist said the issue on Ether's status as a security or commodity still hangs
- Other crypto ETFs may be approved if legislation declares that most digital assets aren't securities, he said
- SEC chief Gensler has already repeatedly refused to answer whether Ether is a security or not
Despite growing optimism in the digital assets industry, financial services titan JPMorgan doesn't see the U.S. Securities and Exchange Commission (SEC) approving spot exchange-traded funds (ETFs) for Solana (SOL) or other cryptocurrencies after the approvals for Bitcoin (BTC) and Ether (ETH).
Nikolaos Panigirtzoglou, JPMorgan's managing director and global market strategist, told The Block Monday that the investment banking giant believes the Wall Street regulator is done approving crypto-related ETFs.
"We doubt. The decision by the SEC to approve ETH ETFs is already stretched given the ambiguity about whether Ethereum should be classified as a security or not," he explained.
When it approved spot Ethereum ETFs last week, the SEC did not provide clarity about the main question in the crypto sector: is Ether a security or not? Ahead of the funds' approval, SEC Chair Gary Gensler once again dodged the question during an interview with CNBC's Squawk Box. He said the matter wasn't a "fundamental question."
However, tech firm Consensys, whose CEO is a co-founder of Ethereum, revealed late last month in a legal filing that the regulatory agency already deemed ETH as a security since last year – some days before Gensler appeared before Congress, under oath, and refused to answer directly whether Ether is a security or not.
Panigirtzoglou noted that the issue on Ethereum's status as a security or commodity will have a significant hold on the SEC's decision regarding other digital assets. "We don't think the SEC would go even further by approving Solano 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 said.
The JPMorgan expert said if U.S. lawmakers eventually draw up and pass legislation that declare most cryptocurrencies aren't securities, the SEC may then approve SOL, the world's current fifth-largest crypto by market cap, and other crypto ETFs.
No such legislation exists at this point, but it is worth noting that some policymakers have been increasingly frustrated with the financial regulator's approach towards crypto regulation.
GOP Rep. John Rose of Tennessee called out the SEC for exceeding its mandate when it issued a Wells Notice on Robinhood over the latter's crypto assets arm. Representatives Mike Flood, R-Neb., and Wiley Nickel, D-N.C., have also slammed the SEC for allegedly discriminating against Bitcoin ETFs.
It remains to be seen whether other crypto ETFs will be approved in the future, but without legislation that clarifies the status of most other digital assets, it appears the crypto space will have to be content with Bitcoin and Ether ETFs for now.
