- SEC decides against appealing a court’s decision regarding Grayscale’s BTC ETF proposal.
- Bitcoin’s value surged past $27,000 after the news broke.
Grayscale Nears Historic ETF Transformation
The recent decision by the U.S. Securities and Exchange Commission (SEC) not to appeal the August court verdict about Grayscale’s Bitcoin ETF proposal has ignited speculation that Grayscale Bitcoin Trust (GBTC) might soon transform into the pioneering Bitcoin ETF in the United States.
📢 BREAKING: @Grayscale's Response to @SECGov's No Rehearing Decision Is Out! #Grayscale is poised to convert its GBTC Trust into the groundbreaking first #BitcoinETF in the history of #Bitcoin:
“The Federal Rules of Appellate Procedure’s 45-day period to seek rehearing has… pic.twitter.com/BOsQ3U2vYc
— Collin Brown (@CollinBrownXRP) October 15, 2023
The SEC faced a deadline until midnight on Friday to consider an appeal. However, it opted for no action, thereby allowing the court’s judgment, which deemed the SEC’s denial of Grayscale’s application as “arbitrary and capricious,” to stand unchallenged. As a reminder, this critical observation came from the D.C. Circuit Court of Appeals, emphasizing that federal agencies must uphold consistency by treating similar cases equivalently.
Contradictory Decisions Spark Controversy
Circuit Judge Neomi Rao had previously highlighted the inconsistency, pointing out that while the SEC had greenlighted the trading of two Bitcoin futures funds on national exchanges, it inexplicably withheld approval for Grayscale’s bitcoin fund.
While the SEC refrained from immediate comments on their decision not to appeal, Grayscale, the world’s most extensive cryptocurrency fund, has yet to release a statement. The focal point of this tussle, the GBTC, has been trading at a discount to its Bitcoin holdings since early 2021, with this disparity even widening to nearly 50% at one juncture.
The conversion of GBTC into an ETF is more than a titular change. Grayscale has consistently maintained that such a conversion would bridge the gap between the fund’s price and its underlying Bitcoin holdings. By adopting the ETF structure, which is characterized by a creation-redemption model, the fund can dynamically adjust its share count based on demand, thus effectively eliminating the persistent discount.
Besides Grayscale, significant players like BlackRock and Fidelity are lined up, seeking the SEC’s nod for their Bitcoin spot ETFs.
As the countdown begins for the final court mandate within the next week, Grayscale has intimated its readiness to metamorphose its GBTC Trust into an ETF, contingent upon the SEC’s final approval. This move, if it comes to fruition, will not only redefine Grayscale’s offering but will also make a monumental mark in the history of Bitcoin.
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