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JPMorgan: US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats Skip to main content

JPMorgan: US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats

JPMorgan: US Crypto Regulations Unlikely to Ease Despite SEC Legal Defeats

Global investment bank JPMorgan has warned investors that U.S. crypto regulations are unlikely to ease, even though the Securities and Exchange Commission (SEC) has lost several recent court cases against crypto firms. “It is far from clear that the regulatory tightening of the crypto industry will lessen significantly going forward given how unregulated this industry is,” said JPMorgan’s analysts.

JPMorgan Sees Continued Crypto Regulatory Tightening

JPMorgan’s analysts explained in a note last week that cryptocurrency regulations in the U.S. are unlikely to ease even after the U.S. Securities and Exchange Commission (SEC) lost several legal battles against crypto firms.

Citing optimism in the crypto space regarding the approval of spot bitcoin exchange-traded funds (ETFs) by the SEC, the JPMorgan analysts cautioned that a spot bitcoin ETF approval does not signal a complete regulatory shift toward the crypto industry. 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 JPMorgan analysts further noted that the recent BTC rally is “rather overdone,” adding that the drivers behind the crypto’s bullishness, such as the expected approval of spot bitcoin ETFs by the SEC and the halving, may have little impact on bitcoin.

While many in the crypto industry anticipate that spot bitcoin ETFs will drive demand for BTC, enticing traditional investors to enter the space, JPMorgan analysts remain unconvinced that these ETFs will infuse new capital into the crypto sector. Instead, they expect spot bitcoin ETFs to draw investment from existing bitcoin products, including Grayscale’s bitcoin trust (GBTC), upcoming ETFs, and bitcoin mining firms. 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 recently revealed that the regulator is considering between eight and 10 spot bitcoin ETF applications. JPMorgan said in September that it expects the SEC to approve multiple spot bitcoin ETFs at once. Microstrategy’s chairman and a vocal proponent of bitcoin, Michael Saylor, has predicted that the demand for BTC will double following the halving and the approval of spot bitcoin ETFs.

What do you think about JPMorgan’s bitcoin outlook and do you think U.S. crypto regulations will ease after the SEC lost against Ripple and Grayscale? Let us know in the comments section below.

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