The United States Securities and Exchange Commission (SEC) is nearing its deadline to appeal a court decision that ruled in favor of Grayscale Investments. This decision forces the SEC to review the fund manager’s application for a spot Bitcoin (BTC) fund. While it is unlikely that the securities regulator will appeal the court’s decision, analysts speculate that there are still ways for the SEC to delay the approval of Grayscale’s spot Bitcoin ETF conversion.
On October 13, the SEC must either appeal the decision to the U.S. Supreme Court, request the Appeals Court to revisit its ruling, or follow the court’s August order and review Grayscale’s bid to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. Bloomberg ETF analyst, Eric Balcunas, believes that an appeal is a longshot but acknowledges the possibility of other obstacles arising. Fellow Bloomberg ETF analyst, James Seyffart, also shares the sentiment that the SEC could find ways to keep delaying the approval, even though denying it on new grounds would be challenging.
A recent note from the law firm, Ropes & Gray, suggests that the GBTC application could be sent back for review to the SEC, giving the regulator another opportunity to reject it based on different grounds. In this scenario, the new denial could be subject to another appeal by GBTC to the D.C. Circuit. Another potential delay could occur if the New York Stock Exchange needs to file a new application to list GBTC, as this could prolong the SEC’s decision-making process to up to eight months.
Currently, there are at least seven spot Bitcoin ETF applications awaiting approval from the SEC. Despite being filed earlier in 2023, all of these applications have faced delays and pushbacks from the regulator. The final approval deadlines for most of these applications are expected to be around March 2024 or later. However, all eyes are on Grayscale’s spot Bitcoin ETF conversion application because if it is approved, it could set a precedent that would make it difficult for the SEC to reject other similar applications.
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Bloomberg analysts have updated the odds of an approved spot Bitcoin ETF this year to 75% following Grayscale’s court win. They predict a 95% likelihood of approval by the end of 2024. If Grayscale’s application is successful, it could pave the way for greater acceptance and adoption of Bitcoin ETFs in the future.
Overall, the SEC’s upcoming decision regarding Grayscale’s spot Bitcoin ETF conversion application holds significant implications for the broader cryptocurrency market. Investors and industry observers eagerly await the outcome as it could shape the future of Bitcoin ETFs and contribute to the mainstream acceptance of cryptocurrencies in the financial sector.
