JPMorgan assessed the chances of launching a bitcoin-ETF after Grayscale's victory

JPMorgan analysts have assessed the prospects of launching a Bitcoin ETF following Grayscale's legal victory. They believe that Grayscale's success in its lawsuit against the SEC will enhance the likelihood of Bitcoin ETF approval. According to the analysts, the SEC's prior refusal to transform the Grayscale Bitcoin Trust into a fully-fledged spot Bitcoin ETF was unjustified.

The recent court decision in favor of Grayscale has raised the chances of the SEC approving multiple companies' applications to launch spot Bitcoin ETFs. This decision stems from a lawsuit filed by Grayscale's founder, Barry Silbert, in October 2021, after the SEC had once again denied the conversion of Grayscale Bitcoin Trust (GBTC) into a complete spot Bitcoin exchange-traded fund (ETF). The court ruled in favor of Grayscale, granting their request to review the SEC's decision and voiding the commission's order.

The key takeaway from the analysts at JPMorgan is that the court found the SEC's injunction to be unreasonable. The SEC failed to provide a valid explanation for treating similar products, such as Bitcoin ETF futures, differently. The court's view is that both futures and spot markets are closely related, sharing the same risk of fraud and manipulation.

JPMorgan's analysts also pointed out that the court's ruling makes it illogical for the SEC to permit Bitcoin ETF futures while prohibiting spot Bitcoin ETFs. They believe that for the SEC to justify its decision to reject the conversion of the Grayscale Bitcoin Trust into a full-fledged spot Bitcoin ETF, it would have to retroactively revoke its prior authorization for Bitcoin ETF futures, which they consider unlikely.

Previously, analysts from Bernstein expressed that Grayscale's triumph over the SEC paves the way for Bitcoin ETFs. They anticipate that the first Bitcoin ETF applications may receive approval in the coming week, with the entire process likely extending into early 2024.

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