JP Morgan analysts led by Nikolaos Panigirtzoglou suggested that Grayscale’s recent court win against the United States Securities and Exchange Commission (SEC) will pave the way for multiple Bitcoin (BTC) exchange-traded funds (ETFs).
In a recent note covered by multiple industry news outlets, JP Morgan analysts suggested that the SEC will have to revise its approval of the futures-based Bitcoin ETF to refuse Grayscale Bitcoin Trust’s (GBTC) conversion to a spot ETF. Since such as move would be “very disruptive and embarassing to the SEC” it seems unlikely, according to the note.
“[The delays applied to Bitcoin ETF decisions] likely points to approval of multiple spot bitcoin ETF applications at once rather than granting a first-mover advantage to any single applicant.”
JP Morgan note
However, JP Morgan analysts noted that even if Bitcoin spot ETFs were approved, they might not lead to substantial price increases for Bitcoin or the overall crypto market. They highlighted that similar spot Bitcoin ETFs have been available in Canada and Europe for some time but haven’t garnered substantial investor attention.
Grayscale, the manager of the world’s largest bitcoin fund, has been engaged in a legal battle with the SEC over its request to convert its investment vehicle into an ETF.
The SEC initially rejected Grayscale’s proposal, citing concerns about investor protection against fraudulent and manipulative practices.
In response to the SEC’s denial, Grayscale criticized the agency’s stance as “illogical” and “discriminatory.” Several affiliations, including The Blockchain Society, The Chamber of Digital Commerce, the Chamber of Progress, and Coin Center, filed an amicus curiae to support Grayscale and criticize the SEC’s decision.
However, Grayscale recently secured a significant victory in its legal battle against the SEC. A panel of three federal judges in Washington overturned the SEC’s decision, allowing Grayscale to proceed with the initiation of a Bitcoin spot ETF. This decision had a positive impact on the crypto market, pumping BTC and crypto prices.
The US Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale, deeming the SEC’s prior rejection of the company’s Bitcoin spot ETF proposal as “arbitrary and capricious.”
The court recognized that Grayscale had presented substantial evidence to support the similarity of their offering to existing Bitcoin futures ETFs, which had already gained SEC approval.
Importantly, the court underscored the parallels, such as the surveillance-sharing agreements both products have with the Chicago Mercantile Exchange (CME).
