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

The Well’s Notice issued to trading platform Robinhood (HOOD) by the U.S. Securities and Exchange Commission (SEC) should not pose an obstacle to the eventual approval of spot ether (ETH) exchange-traded funds (ETFs), JPMorgan (JPM) said in a research report on Wednesday.

The popular trading platform received the notice – a preliminary warning from the regulator about potential enforcement action – on May 4, the company said in a filing on Monday. The notice should be viewed as a “continued attempt by the SEC to reinforce its position that all crypto tokens outside bitcoin and ether should be classified as securities,” analysts led by Nikolaos Panigirtzoglou wrote.

JPMorgan said the SEC’s legal actions against crypto exchanges appears to be an attempt by the agency to influence U.S. policy makers and legislators, who will be responsible for passing crypto market regulations at some point.

“The Wells Notice against Uniswap and Metamask makes it clear that decentralized platforms are not exempted from the SEC’s objective to eventually supervise most of the crypto industry,” the report added.

The bank noted that Robinhood offers trading on 13 crypto tokens outside bitcoin and ether. The trading platform reported strong first-quarter earnings yesterday driven by a surge in crypto trading. This fueled a 40% year-on-year jump in revenue.

The lack of approval of a spot ether ETF this month is unlikely to be a huge disappointment to markets as it was expected, and this is implied by the significant discount to net asset value (NAV) of the Grayscale Ethereum Trust (ETHE), the report said.

“The template is likely to be similar to bitcoin (BTC): with futures based ether ETFs already approved, the SEC (if it denies the approval of spot ether ETFs) is likely to face a legal challenge and eventually lose,” the analysts wrote.

Read more: Robinhood Would Likely Win Crypto Court Case With the SEC: KBW