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Analyzing SEC’s Moves Towards Grayscale Bitcoin ETF Approval and the Speculated $35,000 BTC Rally

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  • The D.C. Circuit Court rules in favor of Grayscale Investments, overturning the SEC’s decision to deny a Bitcoin ETF offering.
  • Experts speculate that the landmark decision may pave the way for approval of spot Bitcoin ETFs in the U.S., with applications from other major financial firms still under review.

A Judicial Milestone: The Underpinnings of the Grayscale ETF Decision

In a decisive judicial ruling, the D.C. Circuit Court unanimously supported Grayscale Investments, effectively quashing the U.S. Securities and Exchange Commission’s (SEC) prior decision to deny the firm’s Bitcoin exchange-traded fund (ETF). The ruling posits a critical development for the cryptocurrency sphere, lending judicial validation to asset vehicles similar to Grayscale’s Bitcoin Trust (GBTC).

Judge Neomi Rao articulated that Grayscale’s proposed Bitcoin ETF was “materially similar” to Bitcoin futures products that have already received SEC approval. The Court took umbrage with the SEC’s rationale for denial, which cited concerns about

“fraudulent and manipulative acts and practices.”

The Court deemed this justification inadequate, mandating a re-examination by the SEC.

It’s worth delineating that a spot Bitcoin ETF offers direct exposure to Bitcoin, while a futures-based Bitcoin ETF exposes the investor to contracts that bet on the future price of Bitcoin. The SEC has previously approved futures-based Bitcoin ETFs but has been reticent to approve spot Bitcoin ETFs. Notably, other financial juggernauts like BlackRock, ARK Invest, and VanEck have applications for spot Bitcoin ETFs that are pending SEC review.

The SEC’s ability to continue delaying decisions on these applications is not infinite. In fact, the commission can push the final deadline for approval only until March 2024. Moreover, the SEC has the option to appeal the Court’s ruling, but industry experts such as Tim Bevan, CEO at ETC Group, posit that spot Bitcoin ETFs’ entry into the U.S. market has become more a question of ‘when’ than ‘if.’

The fallout from the Court’s decision had immediate market repercussions. Bitcoin’s price witnessed a 6% surge, momentarily boosting a languishing cryptocurrency market. The market reaction serves as a de facto “vote of confidence” for spot investment vehicles linked to Bitcoin, according to Lolli CEO and co-founder Alex Adelman.

What’s less clear are the SEC’s subsequent moves. It may opt for an “en banc” hearing, involving all D.C. Circuit judges, or refile to make its concerns more granular—potentially targeting issues like Bitcoin custody or settlement, which are less pertinent to futures ETFs.

Whether or not the SEC will find new grounds for denial remains to be seen. However, the Grayscale decision stands as a fulcrum that could tilt the scales in favor of a more accommodating regulatory landscape for Bitcoin ETFs in the United States.

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Marcel Knobloch
Marcel Knobloch
Marcel is the managing partner of ETHNews and is also known as Collin Brown in the crypto community. He is a seasoned Bitcoin investor who entered the crypto scene during its early stages and has since become a veteran trader in both the cryptocurrency and forex markets. His journey began in 2012 when he made his first investment in Bitcoin, marking the beginning of his deep-rooted passion for blockchain technology and digital assets. With a mission to demystify the intricacies of blockchain for the masses, Marcel endeavors to bring the world of cryptocurrencies closer to everyone. His insightful reports are dedicated to shedding light on the latest developments and innovations within the realms of Bitcoin, Ethereum, Ripple (XRP), IOTA, VeChain, Cardano, Hedera, and numerous other cryptocurrencies. Marcel's in-depth analysis and commitment to providing accessible information make him a trusted source for both novice and experienced crypto enthusiasts. Marcel's academic background includes a Master's Degree in Business Education, which has equipped him with a solid foundation in financial markets and investment strategies. Over the past decade, he has amassed invaluable experience working with various startups across the globe, enriching his knowledge and understanding of the ever-evolving cryptocurrency landscape. With his wealth of expertise and dedication to empowering others with crypto knowledge, Marcel continues to be a driving force in the cryptocurrency community. Business Email: marcel.knobloch@hotmail.com Phone: +49 160 92211628