SEC Faces Decision Deadline on Grayscale Bitcoin ETF: Will They Appeal?

11:38 am
October 13, 2023
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With the deadline approaching, the United States Securities and Exchange Commission (SEC) must make a decision regarding its appeal of a court ruling in favor of Grayscale Investments. The court ruling requires the SEC to review Grayscale’s application for a spot Bitcoin (BTC) fund. While it is unlikely that the SEC will appeal the court’s decision, there are still potential ways for the regulator to delay the approval of Grayscale’s spot Bitcoin ETF conversion.

On October 13th, the SEC must either appeal the decision to the U.S. Supreme Court, request that the Appeals Court revisit the ruling, or follow the court’s August order and review Grayscale’s bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

According to Bloomberg ETF analysts Eric Balchunas and James Seyffart, an appeal by the SEC is unlikely. However, they acknowledge that there is a possibility of other obstacles or delays. Seyffart also noted that the SEC may attempt to deny the application on new grounds, although it would be a difficult task.

Ropes & Gray, a law firm, warned that the GBTC application could be sent back to the SEC for review, providing another opportunity for the regulator to reject it on different grounds. Another potential delay scenario mentioned by the firm is if the New York Stock Exchange has to file a new listing for GBTC, which could result in the SEC taking up to eight months to make a decision on the ETF.

Currently, there are seven spot Bitcoin ETF applications awaiting approval from the SEC. While they were all filed earlier in 2023, they have faced delays and pushback from the SEC, pushing their final approval deadlines to around March 2024 or later. The approval of Grayscale’s spot Bitcoin ETF conversion is particularly significant because it could set a precedent for other ETF applications.

Bloomberg analysts updated their odds of an approved spot Bitcoin ETF this year to 75% following Grayscale’s court win. They project a 95% likelihood of approval by the end of 2024.

Summary:

The SEC will soon have to decide whether to appeal a court ruling in favor of Grayscale Investments regarding its application for a spot Bitcoin ETF. While an appeal is unlikely, there are other potential hurdles and delays that the SEC could employ. The decision deadline is approaching, and the outcome will significantly impact the future of Bitcoin ETFs in the United States.

FAQs:

Will the SEC appeal the court decision in favor of Grayscale Investments?

While an appeal is unlikely, the SEC has until October 13th to make a decision on whether to appeal the court’s ruling.

What happens if the SEC does not appeal?

If the SEC does not appeal, it must review Grayscale’s bid to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF.

What are the potential delays in approving Grayscale’s spot Bitcoin ETF conversion?

Ropes & Gray, a law firm, suggests that the SEC could send the GBTC application back for review on different grounds, or a new filing to list GBTC on the New York Stock Exchange could result in an eight-month delay for the SEC to reach a decision on the ETF.

How many spot Bitcoin ETF applications are currently pending approval?

There are currently seven spot Bitcoin ETF applications awaiting approval from the SEC.

What are the odds of an approved spot Bitcoin ETF?

Bloomberg analysts estimate a 75% likelihood of approval this year and a 95% likelihood of approval by the end of 2024.


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