It is just as likely that the Securities and Exchange Commission will reject a spot Ethereum exchange-traded fund (ETF) next month as it is to approve it, according to JP Morgan analysts. 

Pointing to the regulator’s recent actions against Ethereum-related entities, analysts at the bank said in a Thursday note that things do not look good for approval. The analysis continues an increasingly pessimistic market sentiment regarding the potential new investment vehicle.

“In our opinion the recent news that the SEC is investigating firms associated with the Ethereum Foundation is also consistent with the view that there is no more than a 50% chance of spot Ethereum ETF approval by May,” the report said.  

Last month, news dropped that the Ethereum Foundation—a non-profit organization that supports the Ethereum ecosystem—was being investigated by a “state entity.” The SEC would not confirm this development to Decrypt but other media outlets affirmed it.

The JP Morgan report added that if an Ethereum ETF isn’t approved by next month’s deadline, it’s likely applicants will take action against the regulator. 

“We believe that the most likely scenario is that the SEC eventually loses this litigation (similar to what happened with the Grayscale and Ripple legal battles last year), which means that eventually, the SEC will approve spot Ethereum ETFs (but not as soon as this May),” it added.

In a more optimistic take last month, JP Morgan analysts had said that Ethereum could avoid being designated as a security due to the increased decentralization of the project, and instead be deemed a commodity. But it added today that it was “skeptical that the SEC will classify Ethereum as a commodity” within the next few weeks.

JP Morgan isn’t the only one lowering iexpectations. ETF analysts at Bloomberg Intelligence said last month that the products were unlikely to get the green light next month. The head of research at CoinShares James Butterfill meahwhile told Decrypt that “investors might face disappointment” by the time the deadline comes around. 

A number of high-profile investment firms, such as BlackRock, Fidelity, and Grayscale, want to release Ethereum ETFs. These products would allow investors to gain exposure to the second-biggest digital asset without the need to buy and store it themselves. 

The SEC said yes to ten Bitcoin (BTC) ETFs on January 10. The investment vehicles then started trading the next day and have since been massively successful.

Edited by Ryan Ozawa.