JPMorgan executes first live tokenized settlement with BlackRock and BarclaysIn a pivotal development, analysts from JPMorgan, led by Nikolaos Panigirtzoglou, forecasted that the U.S. Securities and Exchange Commission (SEC) is poised to approve several spot Bitcoin Exchange-Traded Funds (ETFs).
This prediction emerged following Grayscale’s landmark legal win against the SEC, a decision that could reshape the cryptocurrency landscape. Earlier in the week, a federal court mandated the SEC to reconsider its previous rejection of Grayscale’s application to transform its Bitcoin Trust (GBTC) into an ETF. The court labeled the SEC’s denial as “arbitrary and capricious,” questioning the rationale behind permitting futures-based Bitcoin ETFs while rejecting spot-based ones.
SEC’s decision postponement likely signals multiple approvals
Last Thursday, the SEC announced a delay in its decision-making process concerning spot Bitcoin ETF proposals from several companies, including BlackRock, Fidelity, and Invesco, until at least mid-October. JPMorgan’s analysts interpret this postponement as a sign that the SEC is inclined to approve multiple spot Bitcoin ETF applications concurrently. Such a move would negate any first-mover advantage and stimulate competition, potentially leading to reduced ETF fees. Should Grayscale’s trust receive the nod to convert into an ETF, it would likely face intensified pressure to lower its fees.
The analysts further elaborated that the SEC would need to retroactively rescind its prior approvals of futures-based Bitcoin ETFs to justify its rejection of Grayscale’s proposal. However, this action would be “highly disruptive and embarrassing for the SEC,” making it an improbable course of action. Consequently, the analysts concluded that the SEC would likely be “compelled to approve the pending spot Bitcoin ETF applications from various asset managers, including Grayscale.”
While the analysts underscored the significance of the potential approval of spot Bitcoin ETFs, they also issued a word of caution. Spot Bitcoin ETFs have been operational in Canada and Europe for some time but have not garnered substantial investor interest. Moreover, the outflows from gold ETFs over the past year have not flowed into Bitcoin funds, including futures ETFs. The analysts reiterated that although spot Bitcoin ETFs offer certain advantages over their futures-based counterparts, these benefits are “rather marginal.”
In conclusion, Grayscale’s legal victory against the SEC has set a precedent that could catalyze the approval of multiple spot Bitcoin ETFs. This development could inject more competition into the market, potentially lowering fees for investors.
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