According to a report by “The Block”, investment bank TD Cowen believes that the lawsuit between Consensys, the developer of the cryptocurrency wallet MetaMask, and the U.S. Securities and Exchange Commission (SEC) will be a long-term legal dispute. Therefore, the bank reiterated that a physical Ethereum (ETH) ETF is unlikely to be approved before 2025.
Consensys filed a lawsuit against the SEC last week, seeking a court declaration that Ethereum is not a security. The TD Cowen Washington Research Group, led by Jaret Seiberg, stated in a report on Monday (29th) that according to TD Cowen, SEC Chairman Gary Gensler has accepted the court to determine whether Ethereum is a security or a commodity. The bank wrote, “As we have stated in previous reports, we believe Gensler hopes to define how the law applies to cryptocurrencies before Congress passes cryptocurrency market structure legislation.”
TD Cowen views this lawsuit as a positive development because Consensys has raised key issues that need to be addressed. The bank stated that SEC staff had previously stated that Ethereum is not a security, but Gensler has refused to comment on the matter, creating uncertainty that needs to be resolved.
Although TD Cowen acknowledges that this legal battle will take “years rather than months” to resolve, even if Consensys obtains a temporary restraining order, certainty will not be achieved. The bank stated, “Considering previous industry disputes, we are skeptical that the court would be willing to halt regulation of cryptocurrencies.”
TD Cowen also pointed out that Consensys chose to file the lawsuit in a North Texas district court, which is known for being “the least respectful of regulatory agencies,” but also “cannot guarantee a swift result” because “this is the same court that delays credit card overdue fee lawsuits.”
TD Cowen reiterated in the report that it is expected that the SEC will not approve the application for a physical Ethereum ETF by the next ruling deadline on June 11. Instead, the bank believes that this process will be postponed until after the presidential election, as it anticipates increased legal and political pressures in the second half of the year, regardless of who wins in November.