US Crypto Rules Stay Firm Amid SEC’s Legal Losses

SEC's Legal Battles Fail to Soften US Crypto Regulations

Even though the Securities and Exchange Commission (SEC) has recently lost numerous court cases against crypto businesses, global investment bank JPMorgan has cautioned investors that US crypto rules are unlikely to soften. “It is far from clear that the regulatory tightening of the crypto industry will lessen significantly going forward given how unregulated this industry is,” stated JPMorgan’s analysts.

JPMorgan Expects Crypto Regulatory Tightening to Continue

JPMorgan analysts stated this week in a report that cryptocurrency rules in the United States are unlikely to soften, even though the Securities and Exchange Commission (SEC) has lost multiple court battles against crypto businesses.

JPMorgan analysts cautioned that the SEC's approval of spot bitcoin exchange-traded funds (ETFs) does not imply a full regulatory shift towards the crypto business, citing confidence in the crypto field. The investment bank described two legal issues in which the courts decided against the securities regulator in favour of Ripple Labs and Grayscale Investments:

While this year's court verdicts in Ripple vs. SEC and Grayscale vs. SEC signal legal losses for the SEC, it is far from obvious that regulatory tightening of the crypto business will be greatly reduced in the future considering how uncontrolled this industry is.

"We do not believe U.S. lawmakers will change their stance as a result of the above two legal cases, especially with memories of the FTX fraud still fresh," they said, emphasising that crypto rules in the United States are "still pending."

The JPMorgan analysts also stated that the recent BTC rise is "rather overdone," adding that the drivers of the cryptocurrency's bullishness, such as the SEC's expected approval of spot bitcoin ETFs and the halving, may have minimal influence on bitcoin.

While many in the crypto industry believe that spot bitcoin ETFs would increase demand for BTC, encouraging traditional investors to enter the field, JPMorgan analysts are sceptical that these ETFs will bring in fresh money. Instead, they anticipate that current bitcoin products, such as Grayscale's bitcoin trust (GBTC), forthcoming ETFs, and bitcoin mining enterprises, would drive investment into spot bitcoin ETFs. According to the investment bank's note:

We see this move as a relative value trade, with some of the aforementioned bitcoin goods trading at a premium or considerably decreased discount compared to the previous.

SEC Chairman Gary Gensler has stated that the SEC is reviewing eight to ten spot bitcoin ETF applications. In September, JPMorgan stated that it anticipates the SEC to approve numerous spot bitcoin ETFs at the same time. Michael Saylor, the chairman of Microstrategy and an outspoken proponent of Bitcoin, has forecast that demand for BTC will double following the halving and the introduction of spot Bitcoin ETFs.