JP Morgan Legal Challenge Looms if SEC Rejects Ether Spot ETF

According to a report from “The Block,” Morgan Stanley analysts pointed out that the recent Wells notice issued by the U.S. Securities and Exchange Commission (SEC) to Robinhood regarding “alleged unregistered securities trading” is unlikely to hinder the potential approval of Ether spot ETFs, and if the SEC rejects these ETFs, it may face legal challenges and lose.
Earlier this week, Robinhood claimed that its cryptocurrency division had received a Wells notice from the SEC, indicating that the regulatory agency is prepared to take enforcement action against the company for alleged securities violations.
According to Morgan Stanley analysts, the Wells notice appears to be an attempt by the SEC to continue strengthening its position that all cryptocurrencies other than Bitcoin and Ether should be classified as securities. However, the SEC has not yet clearly stated whether Ether is indeed a security. When asked if the Wells notice implies this, Nikolaos Panigirtzoglou stated:
Furthermore, Morgan Stanley analysts also noted that even if the Ether spot ETF is not approved this month, it is “unlikely to be a huge negative.” The market seems to have already discounted any expectations of approval this month, as evidenced by the discount in the Grayscale Ethereum Trust.