JPMorgan warns SEC of potential legal risks
The US financial regulatory agency, the Securities and Exchange Commission (SEC), could find itself in a difficult situation. According to JPMorgan, if the SEC were to reject requests for Bitcoin spot ETFs, it could be subject to lawsuits from the applicants.
Analysts at JPMorgan, led by Nikolaos Panigirtzoglou, clarified that while such a rejection is unlikely, it remains possible. Panigirtzoglou stated:
We believe that a new legal battle over the approval of Bitcoin spot ETFs is not something that the SEC would want to go through again.
A tense legal context
This warning comes in an already tense context between the SEC and crypto industry players. Last month, Grayscale Investments won a lawsuit against the SEC. This victory forced the agency to reconsider Grayscale’s request to convert its bitcoin trust into a Bitcoin spot ETF.
JPMorgan, on the other hand, remains optimistic about the future of Bitcoin ETFs. According to the bank, several approvals for Bitcoin spot ETFs could come “in the coming months“. It also notes that asset managers seem to be making progress in their technical discussions with the SEC.
Rise of Bitcoin fueled by institutional demand
The optimism surrounding the approval of a Bitcoin ETF is not without consequences on the market. The price of Bitcoin has risen nearly 20% in the past week. Unlike previous price movements, this increase is primarily attributed to institutional demand.
JPMorgan highlighted that futures positions based on CME Bitcoin futures contracts, primarily used by institutional investors, have seen a significant increase recently. This contrasts with the movements observed for CME Ethereum futures contracts.
In addition, analysts have noted a significant influx of bitcoins into the largest wallets, highlighting the importance of demand from institutional investors.