SEC Might Face Lawsuits Over Bitcoin ETF Rejections

The potential of SEC approval for a spot bitcoin exchange-traded fund (ETF) has generated rising optimism in latest weeks, with some analysts predicting approvals may come inside months. Potential authorized battles loom if the SEC finally rejects any spot Bitcoin ETF purposes, nonetheless.

According to a Wednesday report from JPMorgan analysts led by Nikolaos Panigirtzoglou, the SEC may face lawsuits from ETF candidates if it declines to approve any spot bitcoin ETFs. Although the analysts view an outright rejection as unlikely, they acknowledge it stays a risk.

The Path Ahead for Bitcoin ETFs

“Any rejection may set off lawsuits towards SEC creating extra authorized troubles for the company,” the analysts wrote within the report.

Panigirtzoglou told The Block that whereas new authorized challenges wouldn’t be ideally suited for the SEC, it’s a danger the company could also be keen to take.

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“We consider {that a} new authorized battle on the problem of spot bitcoin ETF approval isn’t one thing that the SEC could be keen to face once more,” he commented.

This comes after the SEC lost a court case filed against it by Grayscale Investments, concerning the rejection of Grayscale’s utility to transform its bitcoin belief right into a spot ETF. The courtroom dominated in favor of Grayscale in October, mandating that the SEC reconsider the application.

JPMorgan Expects Spot Bitcoin ETF Approvals This 12 months

Regardless of potential authorized hurdles, JPMorgan reiterated that the SEC will likely approve multiple spot bitcoin ETFs within 2023.

In a report final week, the financial institution mentioned asset managers seem like making headway with the SEC by addressing issues round market manipulation and custody of buyer funds. Amended filings have helped make clear these points.

Based on the report, the latest bitcoin rally was probably fueled by institutional demand. The latest spike in bitcoin futures positions on the CME, usually utilized by institutional traders, might be seen as proof of rising institutional curiosity.

In the meantime, inflows into larger Bitcoin wallets have also surged recently.

Bitcoin Worth Surges on ETF Optimism

The bitcoin price has climbed practically 20% over the previous seven days, reaching above $34,000. The crypto market rally comes alongside rising expectations of an imminent spot Bitcoin ETF approval.

In distinction to earlier rallies this cycle, the most recent Bitcoin surge seems pushed by institutional flows quite than retail hypothesis. The analysts identified that Ethereum futures positions haven’t seen the identical spike as Bitcoin futures, indicating Bitcoin is presently attracting larger institutional curiosity.

Whereas JPMorgan and different analysts sound more and more assured about near-term ETF approvals, the trail ahead remains to be unclear. For now, business members are left to invest how the SEC will reply to a rising checklist of spot bitcoin ETF purposes. One other rejection may spur recent authorized battles with excessive stakes for each side.