US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats

US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats – JPMorgan has cautioned investors that despite recent legal setbacks for the Securities and Exchange Commission (SEC) against crypto firms, U.S. crypto regulations are expected to remain stringent. The analysts noted in a recent statement that the industry’s lack of regulation makes it unclear whether regulatory measures will significantly ease in the future.

While acknowledging the positive sentiment within the crypto space regarding the SEC’s potential approval of spot bitcoin exchange-traded funds (ETFs), JPMorgan analysts emphasized that such approval should not be misconstrued as a comprehensive regulatory shift toward the entire crypto industry. They further emphasized that while ETF approval may pave the way for increased institutional participation and market maturity, comprehensive regulatory frameworks for other aspects of the crypto industry remain uncertain. 

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Citing two legal cases where the courts ruled against the securities regulator in favor of Ripple Labs and Grayscale Investments, the investment bank detailed: “While this year’s Ripple vs SEC and Grayscale vs SEC court rulings represent legal defeats for the SEC, it is far from clear that the regulatory tightening of the crypto industry will lessen significantly going forward given how unregulated this industry is.”

“We do not believe U.S. lawmakers would shift their stance because of the above two legal cases, especially with the memories from the FTX fraud still fresh,” they stressed, emphasizing that crypto regulations in the U.S. are “still pending.”  The analysts at JPMorgan also observed that the recent surge in BTC is deemed to be somewhat excessive. They expressed skepticism about the factors fueling the crypto’s bullish trend, suggesting that anticipated events like the SEC’s approval of spot bitcoin ETFs and the halving might have limited influence on Bitcoin’s overall dynamics.

Despite widespread anticipation in the crypto industry that spot bitcoin ETFs will attract new demand for BTC, enticing traditional investors, JPMorgan analysts maintain skepticism. They argue that these ETFs are more likely to redirect capital within the existing crypto market, drawing investments from established bitcoin products like Grayscale’s bitcoin trust (GBTC), upcoming ETFs, and bitcoin mining firms, rather than introducing entirely new funds.

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The investment bank’s note states: “We envisage this shift as a relative value trade as several of the above bitcoin products trade at a premium or much reduced discount relative to the past.” SEC Chairman Gary Gensler has disclosed that the regulatory body is currently evaluating eight to 10 spot bitcoin ETF applications. 

JPMorgan, having previously stated in September, anticipates the SEC approving multiple spot bitcoin ETFs simultaneously. Michael Saylor, MicroStrategy’s chairman and a prominent advocate for bitcoin, foresees a doubling of demand for BTC following both the halving and the approval of spot bitcoin ETFs.

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