JP Morgan analysts have predicted that the SEC will more likely approve the spot bitcoin ETF applications following the recent court ruling that asked the regulator to review its rejection of Grayscale’s application seeking to convert its Grayscale Bitcoin Trust (GBTC) into an ETF, media reports said.
They argue that to deny bitcoin spot ETF, the SEC must cancel the license for bitcoin futures ETF retroactively as the court argued that the risks of fraud and manipulation are similar in futures and spot markets and are also “correlated.”
“The most important element of the Grayscale vs. SEC court ruling was that the denial by SEC was arbitrary and capricious because the Commission failed to explain its different treatment of similar products, i.e., futures-based bitcoin ETFs,” JP Morgan analysts led by Nikolaos Panigirtzoglou wrote.
The court believed there was no justification to allow futures bitcoin ETF but deny spot products. This leaves the SEC in a tight spot with no option but to approve bitcoin spot ETF applications. Going back and revoking the licenses given for futures-based ETF will be too disruptive and embarrassing for the SEC, the report notes.
While a spot bitcoin ETF may be around the corner, the report notes that it’s unlikely to bring a big difference to the crypto market. Bitcoin spot ETFs have been present in markets outside the US but have failed to generate significant investors’ interest, especially since the second quarter of 2021.
