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(Kitco News) –
U.S. banking giant JPMorgan said in a report published Thursday that even if the Securities and Exchange Commission (SEC) approves one or more recent applications for a spot bitcoin exchange-traded fund (ETF), it won’t have a major impact will have crypto markets and will not attract much interest from investors.
“The potential SEC approval of physically-backed Bitcoin ETFs is unlikely to fundamentally transform crypto markets,” the analysts wrote. “Recognize bitcoin ETFs [have] has existed outside of the US, Canada and Europe for some time but failed to attract much investor interest.”
BlackRock, the world’s largest wealth manager, resubmitted its application for a spot bitcoin (BTC) exchange-traded fund (ETF) after the Securities and Exchange Commission (SEC) reportedly dismissed the application as “inadequate” because it had the Exchange had not specified the company would partner under its Surveillance Sharing Agreement (SSA). The updated filing that Nasdaq filed with the SEC on June 30 names the crypto exchange Coinbase as an SSA partner.
Several other firms, including Fidelity, ARK, WisdomTree, VanEck, and Invesco/Galaxy have also resubmitted their spot bitcoin ETF applications and named Coinbase as the SSA exchange, with alternative asset management firm Valkyrie last resubmitting on July 3 .
“Bitcoin funds overall, including futures-based and physically-backed funds, have garnered little interest from investors since Q2 2021, nor have they benefited from investor outflows from gold ETFs over the past year or so,” the report said JPMorgan report.
Analysts noted that while spot bitcoin ETFs remove some of the complexities surrounding direct BTC custody and transfer, as well as the risk associated with futures-based products, these benefits are rather marginal.
“Spot ETFs are more likely to reflect real-time supply and demand than futures ETFs,” they acknowledged, “and allowing them in the US would bring more liquidity and improve price transparency in spot bitcoin markets.”
The analysts added that the launch of spot bitcoin ETFs could also lead to a migration of trading activity and liquidity away from the US bitcoin futures markets “to the extent that spot bitcoin ETFs on futures replace Bitcoin-based ETFs.”
The SEC has a long history of rejecting spot BTC ETFs, dating back to 2017. The regulator has repeatedly stated that these products are vulnerable to fraud and market manipulation.
However, the SEC has been more open-minded about bitcoin futures ETFs, approving at least half a dozen such investment products. On June 23, the regulator even approved the Volatility Shares 2x Bitcoin Strategy ETF (BITX), the first leveraged bitcoin futures ETF to launch in the US market.
Many market participants see the launch of a spot bitcoin ETF as a game-changer for the crypto industry, as it would give institutional investors and retirement accounts easier access to the top cryptocurrency, as it could be acquired through brokerage accounts just as easily as stocks.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, neither Kitco Metals Inc. nor the author can guarantee its accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article shall not be liable for any loss and/or damage arising from the use of this publication.
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