JPMorgan believes SEC approval of Spot Bitcoin ETF won’t significantly impact crypto markets.

According to a research report from JPMorgan, the approval of a spot bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) will not have a significant impact on the crypto markets for several reasons.

While the SEC has not yet approved a bitcoin ETF, there is growing optimism that the regulator will do so, as recent filings have addressed previous concerns.

However, JPMorgan noted that spot bitcoin ETFs have been available in Canada and Europe for some time but have not attracted significant investor interest.

Last month, BlackRock’s unit filed paperwork for a spot bitcoin ETF, leading other asset managers like Invesco and Wisdom Tree to apply or reapply as well.

The report mentioned that bitcoin funds, including futures-based and physically backed funds, have not generated much investor interest since Q2 2021, and have not benefited from outflows from gold ETFs.

While physically backed bitcoin ETFs offer some advantages over futures-based funds, the differences are relatively minor.

Spot ETFs provide a more direct and secure way to gain exposure to bitcoin, eliminating complexities related to custody, transfer, and basis risk associated with futures-based products.

If spot bitcoin ETFs are approved, they are more likely to reflect real-time supply and demand, increasing liquidity and enhancing price transparency in spot bitcoin markets.

The introduction of spot bitcoin ETFs may result in a shift of trading activity and liquidity away from U.S. bitcoin futures markets, if they replace futures-based bitcoin ETFs.

Read more: Probability for U.S. Approval of a Spot Bitcoin ETF Is Fairly High: Bernstein

Edited by Sheldon Reback.