- The SEC faces deadlines within days to decide on seven Bitcoin ETF applications from leading firms like BlackRock, Bitwise, and Fidelity.
- Grayscale Investments recently won against the SEC in a U.S. federal appeals court, raising questions about the SEC’s next move and the likelihood of Bitcoin ETF approvals.
A Tumultuous Landscape for ETF Approvals
The U.S. Securities and Exchange Commission (SEC) finds itself at a crossroads as it grapples with imminent deadlines to render decisions on a plethora of Bitcoin exchange-traded fund (ETF) applications. As of this moment, seven industry giants—BlackRock, Bitwise, VanEck, Fidelity, Invesco, WisdomTree, and Valkyrie—are anxiously awaiting the SEC’s verdicts by September 4th, a timeline substantiated by multiple SEC filings. The situation is further complicated by a recent legal defeat the SEC suffered at the hands of Grayscale Investments in a U.S. federal appeals court.
99.99999% of the world doesn't know that the SEC has to decide on 7 BTC ETFs within the next 3 days:
the suits at our doorstep
— odin free 🦇🔊 (@odin_free) August 29, 2023
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The looming deadlines come on the heels of a critical court ruling on August 29th, where the SEC’s previous rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was deemed “arbitrary and capricious.” According to Bloomberg ETF analyst James Seyffart, this ruling does not obligate the SEC to approve Grayscale’s or other future applications but indubitably elevates the chances of a favorable outcome for the awaiting applicants.
The SEC’s Dilemma Post-Grayscale Ruling
In the aftermath of the court’s ruling in favor of Grayscale, the SEC is confronted with a limited set of choices. It has a 90-day window to file an appeal to the U.S. Supreme Court or apply for an “en banc” review where the full circuit court can overturn a three-judge panel’s decision. Absent an appeal, the court will need to specify the terms of its ruling, potentially instructing the SEC to approve or at least re-evaluate Grayscale’s application.
Seyffart outlines two probable scenarios for the regulator. The SEC could either capitulate and approve Grayscale’s GBTC conversion into a Bitcoin spot ETF or restructure its arguments and potentially revoke the listing of existing Bitcoin futures ETFs. However, the latter option is viewed as highly unlikely, given the SEC’s reported receptiveness to Ethereum futures ETFs.
The proverbial ball is now in the SEC’s court, and its decisions will have far-reaching ramifications for the cryptocurrency market. While the regulator has not yet disclosed its next move, the crypto community is keenly watching, as a favorable decision could usher in a new era of mainstream Bitcoin investment vehicles.
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