The United States Securities and Exchange Commission (SEC) stands at a crossroads following Grayscale’s triumph in a D.C. Appeals Court on October 13th. Failure to appeal this ruling will compel the SEC to either grant approval or seek means to postpone Grayscale’s request for a Bitcoin exchange-traded fund (ETF).
The SEC is approaching a pivotal moment where they must make a crucial decision regarding the recent court judgment that favored Grayscale Investments. This ruling has effectively mandated the SEC to scrutinize Grayscale’s application to transition its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
While some pundits are skeptical about the SEC’s intentions to challenge the court’s verdict. Analysts speculate that the SEC might employ alternative tactics to stall the approval process of Grayscale’s spot Bitcoin ETF conversion.
On October 13th, the SEC faces a pivotal choice: to contest the D.C. Circuit Court of Appeals’ decision in the U.S. Supreme Court, request the Appeals Court to revisit its verdict, or comply with the court’s August directive and initiate a comprehensive review of Grayscale’s proposal.
In response to a query from a user, Bloomberg’s ETF analyst, Eric Balchunas. Expressed doubt regarding the likelihood of an appeal but conceded that there might still be uncharted obstacles ahead.
Concurrently, another Bloomberg ETF analyst, James Seyffart. Voiced skepticism about the SEC’s ability to repudiate the proposal on fresh grounds, deeming it a daunting challenge. Nevertheless, he opined that the SEC could potentially identify strategies for further postponement.
A September advisory from the law firm Ropes & Gray sounded a cautionary note, suggesting the possibility of the GBTC application being remanded to the SEC for a reevaluation, thereby offering the regulator another avenue to potentially reject it on distinct grounds. Ropes & Gray articulated, “In this scenario, the new denial could itself then be subject to another appeal by GBTC to the D.C. Circuit.”
Another scenario for delay, as outlined by Ropes & Gray, would come into play if the New York Stock Exchange were compelled to submit a fresh listing application for GBTC. In this case, the SEC might deliberate for up to eight months before rendering a verdict on the ETF.
Currently, the SEC is deliberating over no less than seven spot BitcoinETF applications. Despite these filings having occurred earlier in 2023, they have all encountered impediments and opposition from the SEC. Consequently, most of the applications are unlikely to receive a final determination until March 2024 or later.
Nevertheless, all eyes remain fixed on Grayscale’s application to transform its Bitcoin Trust into a spot BitcoinETF. Should the SEC grant approval to this application. It may find itself in a quandary when it comes to refuting other submissions.
According to Bloomberg analysts, the probability of a spot BitcoinETF being sanction this year stands at 75%. With the odds surging to a 95% likelihood of approval by the conclusion of 2024.