J.P. Morgan: Approval of Bitcoin Spot ETF by SEC Would Still Have Limited Impact on Cryptocurrency Market

According to a report from CoinDesk, JPMorgan believes that while the approval of a Bitcoin spot ETF by the SEC is more likely, they do not think it will bring significant changes to the market if passed.

JPMorgan: Increased Likelihood of Regulatory Approval

In a research report on Thursday, JPMorgan stated that despite the Securities and Exchange Commission (SEC) in the U.S. receiving numerous applications for Bitcoin exchange-traded funds (ETFs), the bank believes that the approval of a Bitcoin spot ETF is unlikely to bring significant changes to the cryptocurrency market.

The report mentioned that while such ETFs have not yet been approved by the SEC, recent applications have apparently addressed some previous issues, leading the market to be optimistic about regulatory approval.

Difference: Supervisory Sharing Agreement for BlackRock Bitcoin Spot ETF

Limited Interest from Major Investors in Bitcoin Spot ETFs

JPMorgan's report further pointed out that these ETFs have been present in Canada and Europe for some time, but Bitcoin spot ETFs have not successfully attracted interest from major investors.

One of the authors of the report, analyst Nikolaos Panigirtzoglou, wrote:

Starting from the second quarter of 2021, Bitcoin funds based on futures and physically backed have attracted little investor interest and have not benefited from the outflow of investor funds from gold ETFs over the past year or so.

Advantages and Potential Impact of Bitcoin Spot ETFs

JPMorgan's report suggests that physically backed Bitcoin ETFs have some advantages over futures ETFs, although these advantages are relatively small.

A spot ETF provides a more direct and secure way to participate in Bitcoin, eliminating the risks and complexities associated with directly storing and transferring Bitcoin, as well as the underlying risks of futures products.

The report emphasizes that if approved in the U.S., a spot ETF could impact the Bitcoin spot market by increasing price transparency, potentially shifting trading activity and liquidity away from the U.S. Bitcoin futures market.

Currently, the primary operator in the U.S. Bitcoin futures market is the CME Group Chicago Mercantile Exchange.

Difference: What are the differences between Bitcoin spot ETFs and futures ETFs?