JPMorgan: SEC Could Face Lawsuits If Bitcoin ETF Is Rejected

If the U.S. Securities and Exchange Commission (SEC) refuses to approve spot exchange-traded funds based on Bitcoin, it could trigger a flurry of lawsuits, according to JPMorgan analysts. The Block reports.

“We believe that the new legal wrangle over the launch of spot Bitcoin ETFs is not something the SEC would want to face again,” said the firm’s managing director Nikos Panigirtzoglou.

In his view, a negative scenario is unlikely, but “possible.”

The report notes that asset managers appear to have made progress in working with the regulator on the technical aspects and in updating documents clarifying market manipulation and the pooling of client funds.

According to analysts, the recent rise in Bitcoin to $35,000 was “driven by institutional demand,” in contrast to retail trading metrics observed in previous quarters.

“For example, our position on Bitcoin futures on the CME, which is used primarily by institutional investors, has risen sharply over the past week, reaching not only the year’s high but levels last seen in August 2022,” the analysts noted.

Meanwhile, the Ethereum position remains “muted,” JPMorgan added.

Earlier, the firm’s analysts concluded that the new investment crypto product could be approved within months.

Analysts noted the absence of appeal by the Commission against the court’s decision in the Grayscale case. The court ordered the agency not to obstruct the conversion of the bitcoin trust into an exchange-traded fund.

Earlier in September, JPMorgan doubted that the ETF launch would change the crypto market’s rules of the game given the low interest in the product in jurisdictions where they have been approved.

Later, Matrixport analysts forecast a rise in digital gold following the instrument’s approval to $42,000-56,000. CryptoQuant recorded values of $50,000-73,000.