The United States Securities and Exchange Commission (SEC) is approaching its deadline to make a decision regarding the court ruling that favored Grayscale Investments. This requires the SEC to thoroughly examine the fund manager’s application for a Bitcoin exchange-traded fund (ETF) focused on spot Bitcoin.
While many observers doubt that the securities regulator will pursue an appeal, analysts suggest that the SEC may still find ways to delay the approval of Grayscale’s spot Bitcoin ETF conversion.
On October 13th, the SEC is faced with three options: appealing the decision of the D.C. Circuit Court of Appeals to the U.S. Supreme Court, requesting a review of the ruling by the Appeals Court, or complying with the court’s previous order from August to review Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
In response to a question from a Bloomberg ETF analyst, Eric Balchunas, in an October 12th post, expressed his belief that an appeal is unlikely, but there may still be additional obstacles to overcome.
In another publication, James Seyffart, a fellow ETF analyst at Bloomberg, expressed his view that it would be unlikely for the SEC to reject the application on new grounds. He described it as a challenging task that would require careful maneuvering. However, Seyffart suggested that the SEC could still employ tactics to prolong the process and create further delays.
According to a September note from the law firm Ropes & Gray, there is a possibility that the GBTC application may be sent back to the SEC for further review. This would grant the regulator another opportunity to reject the application on different grounds. The law firm stated that in such a scenario, GBTC could potentially appeal the new denial to the D.C. Circuit.
Another potential scenario for delay, as outlined by Ropes & Gray, involves the New York Stock Exchange having to file a new listing application for GBTC. In this case, it is conceivable that the SEC could take up to eight months to reach a decision on the ETF.
Currently, there are at least seven spot Bitcoin ETF applications awaiting approval from the SEC. Despite being submitted to the regulator earlier in 2023, all of these applications have encountered setbacks and resistance from the SEC, resulting in final approval deadlines mostly set for March 2024 or later.
However, the spotlight is primarily on Grayscale’s spot Bitcoin ETF conversion application. If the SEC approves this application, it may face challenges in finding valid grounds to reject other similar applications.
Bloomberg analysts, who updated their predictions following Grayscale’s court victory, estimate a 75% likelihood of a spot Bitcoin ETF being approved this year. These odds increase to a 95% likelihood of approval by the end of 2024.