Per crypto news outlet The Block, JPMorgan recently weighed in, among the voices navigating the crypto space, suggesting possible legal repercussions should the US Securities and Exchange Commission (SEC) decline spot Bitcoin Exchange Traded Fund (ETF) applications.
Notably, the implications of the SEC’s decisions on crypto ETFs are vast, affecting both institutional and retail investors. JPMorgan’s recent analysis provides insights into what might unfold if the SEC rebuffs spot Bitcoin ETF proposals, potentially triggering a series of legal confrontations with applicants.
Spot Bitcoin ETF Legal Repercussions Await The SEC?
JPMorgan analysts, spearheaded by Nikolaos Panigirtzoglou, highlighted in a recent report that a refusal by the SEC to approve spot Bitcoin ETF applications could spur legal actions.
The report posited that such rejections might pave the way for lawsuits against the US SEC, further “complicating” the regulatory environment. While the probability of rejections remains uncertain, Panigirtzoglou, in the conversation, stated:
We believe that a new legal battle on the issue of spot bitcoin ETF approval is not something that the SEC would be willing to face again.
The banking giant also acknowledged advancements made by asset managers in their engagements with the SEC. These include technical preparations and revised filings addressing concerns like potential “market manipulation” and “commingling of customer funds,” according to the report.
Bitcoin’s Institutional Climb
Further delving into the report shows that the recent surge in Bitcoin’s performance isn’t “just another” rally fueled by individual enthusiasts. JPMorgan’s analyst particularly points towards a different catalyst this time: institutional demand.
The analyst disclosed that his shift is evident when comparing the futures position proxy anchored in CME Bitcoin futures – an instrument predominantly leveraged by institutional investors.
According to the JPMorgan analyst, data reveals a marked surge over the past week, reaching not only the peak for the year but also levels reminiscent of those before the FTX collapse in August 2022. In contrast, the comparable futures position indicator for CME Ethereum futures remains relatively apathetic.
Corroborating the institutional momentum behind Bitcoin, the JPMorgan analyst also noted significant inflows into larger Bitcoin wallets, a trend emphasizing institutional demand.
While this was being reported, Bitcoin retraced some of its bullish momentum, recording a 3.2% drop in the past day. However, the asset remains strong overall, boasting a 20% increase over the past 7 days. In the past two weeks, it has seen a rise of nearly 30%, trading above $34,000 at the time of writing.
Featured image from Unsplash, Chart fromTradingView