JP Morgan believes SEC will be forced to approve ETFs after losing case against Grayscale

JP Morgan analysts led by Nikolaos Panigirtzoglou judge the SEC volition beryllium forced to o.k. the spot Bitcoin exchange-traded fund (ETF) applications submitted by aggregate firms aft losing its court case against Grayscale Investments, The Block reported, citing a probe note.

A national tribunal ruled that the SEC indispensable review its rejection of Grayscale’s connection to person its bitcoin spot into an ETF. The tribunal said that the SEC’s rejection was “arbitrary and capricious” arsenic it failed to explicate wherefore it was treating akin products — futures-based Bitcoin ETFs and spot-based Bitcoin ETFs — successful antithetic ways.

The analysts wrote successful a probe enactment that the SEC would person to backtrack connected its erstwhile approvals of futures-based ETFs to cull some Grayscale’s petition to person its spot into an ETF and the spot Bitcoin ETF applications. They added that this determination would beryllium “very disruptive and embarrassing for the SEC” and frankincense seems unlikely.

The SEC has postponed decisions connected spot bitcoin ETFs projected by respective firms successful caller months — including accepted fiscal manufacture giants similar BlackRock, Fidelity Investments, and Invesco — until astatine slightest mid-October.

The analysts believe:

“[The delay] apt points to support of aggregate spot bitcoin ETF applications astatine erstwhile alternatively than granting a first-mover vantage to immoderate azygous applicant.”

This could pb to much contention successful ETF fees, putting unit connected Grayscale to little its fees if its spot is converted to the world’s largest bitcoin spot ETF.

Despite the affirmative momentum toward regulatory support for spot Bitcoin ETFs, JP Morgan believes these products volition not importantly interaction the wide crypto and fiscal industries.

According to the JP Morgan probe note, spot bitcoin ETFs person existed successful Canada and Europe for immoderate clip but person failed to pull important capitalist interest. Additionally, outflows from golden ETFs successful caller months did not payment bitcoin funds, including futures ETFs.

The analysts foretell that ETFs launched successful the U.S. volition apt execute similarly.

The station JP Morgan believes SEC volition beryllium forced to o.k. ETFs aft losing lawsuit against Grayscale appeared archetypal connected CryptoSlate.