After the U.S. Securities and Exchange Commission (SEC) postponed its decision to rule on seven bitcoin spot ETFs last week, causing an immediate crash in the price of the currency, which traded at $26,000 in Asian markets on Monday (Sept. 4), JPMorgan issued an outlook that the regulator will likely be forced to approve them eventually. Former SEC Chairman Jay Clayton also said that approval was inevitable, emphasizing that the split between futures and spot can’t last forever and create favorable conditions for bitcoin.
After Grayscale won its legal battle against the SEC to convert its bitcoin trust GBTC into a bitcoin spot ETF in late August, market expectations that bitcoin spot ETFs will soon cross the border have risen again, even though the SEC announced last week that it was delaying a decision on seven bitcoin spot ETF applications.
According to a report by The Block, JPMorgan Chase believes that the SEC may have no choice but to approve several bitcoin spot ETF applications after gray out litigation victories.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report on Friday: “The court order essentially suggests that, in the context of approving the bitcoin futures ETF, the SEC has no reason to reject the spot ETF on the basis of market manipulation concerns, as fraud and market manipulation pose a similar risk to both the futures and spot products.
If the SEC sticks to its guns, then it would have to retroactively revoke its earlier approval of a bitcoin futures ETF, but such a move “would be so disruptive and embarrassing to investors that it is unlikely that the SEC would revoke the futures ETF application, and thus it is more likely that the SEC would be forced to approve a number of investments, including the still pending bitcoin spot ETF applications of the Gray Scale management firms.”
Clayton also mentioned in an interview with CNBC on August 31 that with a major shift in the industry landscape, now that large institutions with strong oversight mechanisms have entered the market, and that these institutions are demonstrating confidence in the integrity and reliability of the spot bitcoin market, it seems to him that it is now appropriate to open up retail access to bitcoin.
Although Clayton noted that the court gave the SEC additional time to re-evaluate the application, so there is still uncertainty, overall Clayton remains optimistic about the approval of the Bitcoin Spot ETF.
He mentioned, “Bitcoin is an underlying asset that retail and institutional investors want access to, and importantly, some of our most trusted providers want to offer this product to retail investors. Ratification is definitely inevitable, and with futures and spot products split in two, that can’t last forever, and I think that’s the path we’re on.”
Citing a recent discussion with a blogger, Tommy Shaughnessy, co-founder of Delphi Digital, said, “ETFs are going to change the aura of acceptance of cryptocurrencies, and it’s going to bring that acceptance when anyone can buy it. Everyone can work for cryptocurrency companies, everyone can push for new regulations, everyone can own tokens.”
