The U.S. Securities and Exchange Commission (SEC) may face lawsuits if it rejects spot Bitcoin exchange-traded fund (ETF) applications, a scenario that is causing concern among industry insiders.
Analysts from JPMorgan, led by Nikolaos Panigirtzoglou, expressed growing optimism about the potential approval of a spot Bitcoin ETF. However, they warn of potential legal issues should the SEC decide against approval.
The analysts commented, “Any rejection could trigger lawsuits against SEC creating more legal troubles for the agency.” Panigirtzoglou added that while taking on new legal challenges is not ideal for the SEC, it’s a risk the agency might be willing to endure.
This comes on the heels of the recent court case Grayscale Investments won against the SEC, in which the court ordered the SEC to reconsider its rejection of Grayscale’s spot ETF application.
Despite potential legal obstacles, JPMorgan reaffirmed its belief that the SEC will most likely green-light multiple spot Bitcoin ETFs within 2023.
The analysts further noted the recent Bitcoin rally, attributing it mainly to institutional demand. They highlighted the upsurge in Bitcoin futures positions on the CME, typically utilized by institutional investors, as a sign of burgeoning institutional interest.
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