The United States Securities and Exchange Commission (SEC) is approaching its deadline to appeal a court decision that ruled in favor of Grayscale Investments. This means that the SEC will have to review the fund manager’s application for a spot Bitcoin (BTC) fund. While many experts believe that the securities regulator will not appeal the court’s decision, there are still potential ways for the SEC to delay the approval of Grayscale’s spot Bitcoin ETF conversion. The SEC has three options before the October 13 deadline: appeal the decision to the U.S. Supreme Court, request the Appeals Court to revisit its ruling, or follow the court’s previous order and review Grayscale’s bid for the ETF conversion.
Bloomberg ETF analyst Eric Balchunas stated in a post on October 12 that an appeal by the SEC is unlikely, but he acknowledged the possibility of other obstacles. Fellow Bloomberg ETF analyst James Seyffart also shared a similar opinion, stating that an SEC attempt to deny Grayscale’s application on new grounds would be difficult but not impossible. According to Seyffart, the SEC could find ways to keep delaying the approval process.
Legal firm Ropes & Gray warned in a September note that the GBTC application could be sent back to the SEC for review, providing the regulator with another opportunity to reject it on a different basis. In this scenario, the new denial could be subject to another appeal by Grayscale to the D.C. Circuit. Another potential delay scenario mentioned by Ropes & Gray is if the New York Stock Exchange needs to file a new listing for GBTC, resulting in a potential eight-month delay in the SEC’s decision on the ETF.
Currently, there are seven spot Bitcoin ETF applications awaiting approval from the SEC. Despite being filed earlier this year, all of these applications have faced delays and pushback from the SEC. The final approval deadlines for most of these applications are expected to be around March 2024 or later. However, the focus is on Grayscale’s application as its approval could set a precedent for other applications.
According to Bloomberg analysts, the likelihood of an approved spot Bitcoin ETF this year is 75%, with the odds increasing to a 95% likelihood of approval by the end of 2024. This update came after Grayscale’s court victory. If the SEC approves Grayscale’s application, it may face challenges in finding reasons to reject other applications.
In conclusion, the SEC is approaching its deadline to appeal the court decision in favor of Grayscale Investments. While an appeal is unlikely, there are still options for the SEC to delay the approval of Grayscale’s spot Bitcoin ETF conversion. Legal experts and analysts believe that the SEC might find ways to delay the process further. The approval of Grayscale’s application could have significant implications for other spot Bitcoin ETF applications, as it may set a precedent for their approval. The odds of an approved spot Bitcoin ETF are currently high, with Bloomberg analysts predicting a 75% chance of approval this year and a 95% chance by the end of 2024.