Coinbase expects 30% to 40% chance of spot ETH ETF approval by month-end

Crypto exchange Coinbase believes the odds of the SEC approving spot Ethereum ETFs by the end of the month stand between 30% to 40%.

In a May 15 report, Coinbase Institutional Research Analyst David Han asserted that the main factor that led the SEC to approve spot Bitcoin ETFs — the correlation between CME futures product and spot exchange rates — could also lead it to approve spot Ethereum ETFs.

Han said there is “room for surprise to the upside on this decision,” both on prediction markets and in the fact that Grayscale Ethereum Trust is trading at a 24% discount.

He conceded that the SEC’s silence has caused “uncertainty” and that spot ETH ETFs that specifically aim to engage in ETH staking are unlikely to gain approval.

Politics one possible factor

Coinbase is optimistic in part because of crypto’s key role in US politics. Han said that the SEC will spend political capital by denying spot ETH ETFs, a strategy that Coinbase believes is uncertain.

Bankless founder Ryan Sean Adams echoed that sentiment, stating that expectations for approval were low until Democrats “caught wind their anti-crypto SEC chair could lose them an election.”

Neither individual described any specific political developments. However, recent surveys show that crypto owners slightly favor Trump over Biden. Uniswap founder Hayden Adams has described crypto as a Republican rallying point in contrast to the Biden administration’s regulatory approach.

SEC Chair Gensler and two other voting commissioners are Democrats, while another two voting commissioners are Republicans, giving the agency both Democratic leadership and majority.

Approval could be delayed

Han noted that the SEC does not need to approve all spot applications at once.

Each spot ETH ETF application has a different decision deadline. The SEC must decide on VanEck’s application first by May 23 but can decide on BlackRock and Fidelity’s applications as late as August.

Han also argued that a May rejection 23 could…