According to banking giant JPMorgan, following the victory of Grayscale in its lawsuit against the Securities and Exchange Commission (SEC), the SEC will have no choice but to approve multiple spot Bitcoin exchange-traded fund (ETF) applications.
The Impact of the Grayscale Lawsuit on ETFs!
Experts argue that Grayscale’s win could mean that the SEC will have to withdraw its previous approval for Bitcoin ETFs based on futures contracts in order to defend its rejection of Grayscale’s proposal to convert its Bitcoin trust into an ETF. JPMorgan analysts, led by Nikolaos Panigirtzoglou, stated in a note on Friday that this scenario is unlikely. The experts stated the following:
It seems more likely that the SEC will be forced to approve various spot Bitcoin ETF applications, including Grayscale’s.
Earlier this week, a federal court ruled that the SEC should reconsider its rejection of Grayscale’s attempt to convert its Grayscale Bitcoin Trust (GBTC) into an ETF. The court decided that while the SEC allows Bitcoin ETFs based on futures contracts, there is no reason to reject spot Bitcoin ETFs.
Critical Comment from JPMorgan Analysts!
The reason for this is said to be the fraud and manipulation in the Bitcoin spot market, which poses a similar risk for both futures and spot products due to the spot Bitcoin market and CME. The court also concluded that the SEC’s rejection of Grayscale’s proposal was “arbitrary” because the institution could not explain its different treatment of similar products.
On Thursday, the SEC announced that it would delay its decisions on spot Bitcoin ETFs proposed by several firms, including BlackRock, Fidelity, and Invesco, at least until mid-October. JPMorgan analysts commented on the matter:
It probably indicates the simultaneous approval of multiple spot Bitcoin ETF applications instead of giving the first-mover advantage to any applicant.
