Oct 13, 2023

What Are the Implications of the SEC Not Appealing Grayscale’s Bitcoin ETF Ruling?

SEC Doesn't Appeal Grayscale Bitcoin ETF Ruling: What Happens?
What happens if SEC doesn’t appeal Grayscale spot Bitcoin ETF ruling?

Grayscale Investments Awaiting SEC Decision

The United States Securities and Exchange Commission (SEC) is quickly approaching its deadline to appeal the court decision that favored Grayscale Investments, requiring the regulator to assess the fund manager’s application for a spot Bitcoin (BTC) fund.

Though many observers don’t anticipate the securities regulator to challenge the court’s decision, analysts claim there are still potential methods for the SEC to delay the approval of Grayscale’s spot Bitcoin ETF conversion.

On Oct. 13, the SEC must either appeal the D.C. Circuit Court of Appeals decision to the U.S. Supreme Court, ask the Appeals Court to reconsider its ruling, or abide by the court’s August order and review Grayscale’s bid to modify its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

In an Oct. 12 post responding to a user’s query, Bloomberg ETF analyst Eric Balchunas stated that an appeal was unlikely, although there could still be other hindrances.

SEC Attempt to Deny a New Crypto ETF

In a separate post, Bloomberg ETF analyst James Seyffart commented that the SEC may have a difficult time denying the GBTC application on new grounds, but they could “find ways to keep delaying.”

Law firm Ropes & Gray warned in a September note that the SEC could send the GBTC application back for review, giving them another chance to reject it. If that happens, the denial could be subject to an appeal to the D.C. Circuit.

Alternatively, if the New York Stock Exchange must make a new filing to list GBTC, the SEC could take up to eight months to reach a decision on the crypto ETF.

Grayscale’s Spot Bitcoin ETF Conversion Application

At present, there are seven spot Bitcoin ETF applications pending before the SEC for approval. All of them were filed in 2023, but the SEC has been delaying their approval, with most of them expecting to be approved by March 2024 or later.

However, most of the attention is on Grayscale’s spot Bitcoin ETF conversion application. If the SEC approves it, then it might be difficult for the regulator to reject other applications. According to Bloomberg analysts, who revised the odds after Grayscale’s court victory, the likelihood of an approved spot Bitcoin ETF this year is 75%. The odds jump to 95% for approval by the end of 2024.

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