The United States Securities and Exchange Commission (SEC) is approaching the deadline to appeal a court decision favoring Grayscale Investments. This decision has forced the regulator to reconsider the fund manager’s application for a Bitcoin (BTC) fund. While it is unlikely that the SEC will appeal the court’s decision, there are still potential methods for the regulator to delay the approval of Grayscale’s spot Bitcoin ETF conversion.
On October 13th, the SEC must make a decision on whether to appeal the D.C. Circuit Court of Appeals’ ruling to the U.S. Supreme Court, petition the Appeals Court to review its decision, or follow the court’s August order and review Grayscale’s bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. Bloomberg ETF analyst Eric Balcunas believes that an appeal is a longshot, but there is always a chance of other obstacles arising.
Fellow Bloomberg ETF analyst James Seyffart agrees with Balcunas, stating that an SEC attempt to deny the application on new grounds is unlikely. However, Seyffart believes that the SEC could find ways to continue delaying the approval process. A note from law firm Ropes & Gray warned that the GBTC application could be sent back to the SEC for review, giving the regulator another opportunity to reject it based on different reasoning.
Ropes & Gray also suggests another possible delay scenario. If the New York Stock Exchange needs to file a new listing for GBTC, the SEC could take up to eight months to make a decision on the ETF. Currently, the SEC has at least seven spot Bitcoin ETF applications awaiting approval. Despite being filed earlier in 2023, these applications have faced delays and pushbacks from the SEC, with most final approval deadlines set for March 2024 or later.
The spotlight is mainly on Grayscale’s spot Bitcoin ETF conversion application because its approval could set a precedent for other applications. If the SEC approves Grayscale’s application, it may find it difficult to justify rejecting other similar proposals. Bloomberg analysts updated the likelihood of an approved spot Bitcoin ETF this year to 75% following Grayscale’s court win. By the end of 2024, analysts predict a 95% chance of approval.
In conclusion, the SEC is running out of time to appeal the court’s decision in favor of Grayscale Investments. While an appeal is unlikely, there are still ways for the SEC to delay the approval of Grayscale’s spot Bitcoin ETF conversion. Other potential obstacles may arise during the review process. Grayscale’s application is pivotal because its approval could influence the fate of other spot Bitcoin ETF applications. Analysts believe there is a high likelihood of approval for a spot Bitcoin ETF in the near future.