Digital Assets: Another SEC Rejection Of A Spot Bitcoin ETF Could Open a Pandora’s Box Of Legal Actions (JPMorgan)

October 27, 2023 | Digital Assets, News

According to a report by JPMorgan analysts, another rejection by the SEC is unlikely but still within the realm of possibility.

JPMorgan (NYSE: JPM) has warned that if the United States Securities and Exchange Commission (SEC) rejects spot bitcoin exchange-traded fund (ETF) applications, it could potentially face legal action from the applicants. In a report, JPMorgan analysts, led by Nikolaos Panigirtzoglou, emphasized that any such rejection might lead to lawsuits against the SEC, creating legal challenges for the agency.

While the likelihood of a rejection is considered low, it remains a possibility. Panigirtzoglou stated that the SEC might not be willing to engage in a new legal battle over spot bitcoin ETF approval. (The Block)

The SEC recently faced a legal defeat in a case brought by Grayscale Investments, leading to a court ruling in favor of the crypto asset manager. As a result, the SEC was mandated to reconsider Grayscale’s application to convert its bitcoin trust into a spot bitcoin ETF.

JPMorgan anticipates that multiple spot bitcoin ETF approvals could be granted within the next few months. They also noted that asset managers are making progress with the SEC, addressing technical issues and amending filings related to market manipulation and customer fund commingling.

The recent surge in Bitcoin’s price, up nearly 20% in the past week, is attributed to growing optimism about the approval of a spot bitcoin ETF and institutional demand. JPMorgan analysts highlighted that institutional investors are driving this performance, as evidenced by the significant increase in futures positions based on CME Bitcoin futures.

Additionally, there has been a notable influx of Bitcoin into larger wallets, further indicating institutional investor interest.

Related Story:  Grayscale Files Application For New Spot Bitcoin ETF Preparatory To Conversion And Listing Of Its Bitcoin Trust

Photo by Robert Linder on Unsplash

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