Grayscale Awaits SEC Decision on Bitcoin Spot ETF After Court Ruling
Summary:
The U.S. Securities and Exchange Commission (SEC) faces a deadline to challenge a court ruling in favor of Grayscale Investments and reconsider the firm's Bitcoin spot fund application. While most don't believe the SEC will challenge the ruling, it is suggested that the agency might find ways to postpone Grayscale's conversion to a Bitcoin spot ETF. However, analysts peg the likelihood of a spot Bitcoin ETF approval this year at 75% and the chance of approval by the end of 2024 at 95%.
The U.S. Securities and Exchange Commission (SEC) is nearing the deadline to contest a court ruling that benefitted Grayscale Investments. This mandates the SEC to reconsider the asset management firm's application for a Bitcoin (BTC) spot fund. Although it’s generally speculated that the SEC won’t challenge the ruling, there’s scope for the agency to postpone the approval of Grayscale’s conversion to a spot Bitcoin ETF. By Oct. 13, the SEC has to either challenge the decision of the D.C. Circuit Court of Appeals in the Supreme Court, request the Appeals Court to reassess its verdict, or abide by the court's order from August and examine Grayscale's proposal to transform its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
On Oct. 12, Bloomberg ETF analyst Eric Balcunas, answering a user’s query, conveyed that an appeal seemed improbable, while acknowledging potential obstacles. He stated, “An appeal is less likely […] However, something else might arise.” At the same time, James Seyffart, another ETF analyst at Bloomberg, opined that the SEC denying based on fresh reasons was remote and challenging, but it could “devise means to prolong.”
A September recommendation from the legal firm Ropes & Gray suggested that the GBTC application might be returned to the SEC, offering another opportunity for the regulator to reject it on different grounds. The law firm elucidated that a fresh denial could lead to an additional appeal by GBTC to the D.C. Circuit. Ropes & Gray also suggested that the SEC could take up to eight months to reach a verdict on the ETF if the New York Stock Exchange has to submit a new filing to list GBTC.
At present, the SEC is reviewing at least seven Bitcoin spot ETF applications. Despite being lodged with the SEC earlier in 2023, all applications have been stalled due to setbacks from the SEC, extending the final decision dates to March 2024 or beyond.
Nevertheless, Grayscale’s Bitcoin spot ETF conversion application remains the focal point because if it’s given the green light, the SEC might find it challenging to decline further applications. Bloomberg analysts have estimated a 75% probability of a spot Bitcoin ETF approval this year, following Grayscale's victory in court. They predict a 95% chance of approval by the end of 2024.
Published At
10/13/2023 6:18:46 AM
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