JP Morgan Analyst Insights by Crypto News

JP Morgan analysts, led by Nikolaos Panigirtzoglou, believe that Grayscale’s recent legal success against the United States Securities and Exchange Commission (SEC) could pave the way for multiple Bitcoin exchange-traded funds (ETFs).

In a recent analysis, the analysts suggested that the SEC may be prompted to revisit its stance on approving futures-based Bitcoin ETFs in order to avert the conversion of the Grayscale Bitcoin Trust (GBTC) into a spot ETF. However, they consider this prospect to be unlikely, arguing that it would create significant disruption and could be embarrassing for the SEC.

The note emphasizes that the delays surrounding Bitcoin ETF decisions indicate the possibility of multiple spot Bitcoin ETF applications being approved simultaneously, rather than favoring a first-mover advantage for any single entity.

The analysts also pointed out that even if spot Bitcoin ETFs gain approval, they may not result in substantial price hikes for Bitcoin or the broader crypto market. They noted that similar offerings in Canada and Europe had not attracted significant investor interest despite being available for some time.

Grayscale, known as the manager of the largest Bitcoin fund globally, has been in a legal dispute with the SEC regarding its bid to transform its investment vehicle into an ETF. The SEC had initially rejected Grayscale’s application, citing concerns for investor protection against potential fraud and manipulation.

Following the SEC’s denial, Grayscale criticized the agency’s reasoning as “illogical” and “discriminatory.” Various organizations, including The Blockchain Society and Coin Center, submitted amicus curiae briefs supporting Grayscale and expressing criticism of the SEC’s decision.

Recently, Grayscale achieved a pivotal victory in its legal fight against the SEC. A panel of three federal judges in Washington overturned the SEC’s prior denial, allowing Grayscale to advance with its plan for a Bitcoin spot ETF, a ruling that positively influenced Bitcoin and other crypto prices.

The U.S. Court of Appeals for the District of Columbia Circuit sided with Grayscale, labelling the SEC’s rejection of the company’s spot ETF proposal as “arbitrary and capricious.” The court acknowledged that Grayscale had submitted substantial evidence demonstrating the parallels between its offering and existing Bitcoin futures ETFs, which had already received SEC approval. The court further highlighted similarities, such as the surveillance-sharing agreements both products have with the Chicago Mercantile Exchange.