JPMorgan Chase & Co (NYSE: JPM) anticipates that the U.S. Securities and Exchange Commission (SEC) may simultaneously greenlight multiple spot Bitcoin exchange-traded funds (ETFs).
This prediction comes in light of the SEC's recent interactions with Grayscale Investments, a leading crypto asset manager.
The SEC's stance on its Grayscale Bitcoin Trust into a spot Bitcoin ETF has been a topic of discussion at various platforms, including the upcoming Benzinga's Future of Digital Assets conference on Nov. 14.
JPMorgan analyst Nikolaos Panigirtzoglou highlighted in a recent note that the SEC might find itself cornered into approving a slew of spot bitcoin ETFs.
This comes after a court sided with Grayscale Investments concerning its proposal.
Panigirtzoglou noted that the court ruling on the Grayscale case against the SEC "has boosted crypto markets optimism."
"With this decision following on from the recent SEC vs. Ripple court decision, it has, in turn, raised optimism that the SEC crackdown against crypto companies... would lessen going forward as the SEC faces legal challenges," he added.
The crux of the Grayscale vs. SEC court decision, as Panigirtzoglou pointed out, was the SEC's inconsistent treatment of similar products, such as futures-based bitcoin ETFs. The court emphasized that both futures and spot products face similar risks due to the close correlation between the spot bitcoin market and the CME Bitcoin futures market.
"This is highly significant because it implies that for the SEC to defend its denial of Grayscale's proposal... it would have to retroactively withdraw its previous approval of futures-based bitcoin ETFs," Panigirtzoglou said.
He believes that the SEC is unlikely to take such a disruptive step, which would tarnish its reputation.
Instead, Panigirtzoglou envisions the SEC approving pending spot bitcoin ETF applications from various asset managers, including Grayscale.
The SEC's recent decision to delay its verdict on pending spot Bitcoin ETF applications until October might indicate a collective approval strategy, fostering competition and potentially driving down ETF fees, he explained.