The United States Securities and Exchange Commission is approaching its initial deadlines to render decisions on seven fresh applications for Bitcoin spot exchange-traded funds (ETFs), the most recent of which is scheduled for September 4th. This situation arises following the SEC’s loss to Grayscale Investments in a U.S. federal appeals court.
Bitwise, an investment firm, is slated to receive the SEC’s decision on the approval of its ETF on September 1st. In addition, BlackRock, VanEck, Fidelity, Invesco, and Wisdomtree are all awaiting the SEC’s determinations on their respective funds by September 2nd, as outlined in multiple SEC filings.
Concurrently, Valkyrie anticipates feedback from the SEC on September 4th.
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On August 29th, the U.S. Court of Appeals issued a ruling stating that the Securities and Exchange Commission’s (SEC) denial of Grayscale’s bid to transform its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was characterized as “arbitrary and capricious.” However, according to Bloomberg ETF analyst James Seyffart, this ruling doesn’t obligate the SEC to greenlight Grayscale’s application or those of others in the future.
During an interview with Bloomberg on August 29th, Seyffart elucidated that Grayscale’s victory unquestionably heightens the probability of a favorable outcome for the subsequent wave of applicants.
Nevertheless, he remains uncertain about the timing of this development, as the SEC possesses the authority to prolong its deliberations and maintains two additional suggested deadlines for each fund before it is compelled to arrive at a final verdict on the 240th day after the initial filing.
For the aspirant applicants, the ultimate deadlines set by the SEC fall in mid-March of the coming year.
What courses of action does the SEC have following the Grayscale decision?
Following today’s verdict favoring Grayscale, the regulatory body holds a 90-day window to either initiate an appeal with the U.S. Supreme Court or request an En banc review, which entails a complete circuit court revisiting a decision made by a panel of three judges.
Nonetheless, the SEC has not yet indicated its subsequent course of action.
In the event that the SEC refrains from appealing, the court will be required to define the implementation of its judgment, which might involve instructing the SEC to endorse Grayscale’s application or, at the very least, reevaluate it.
In either scenario, Seyffart perceived two plausible choices available to the regulator.
The initial option entails the regulator acknowledging defeat and granting approval for Grayscale to transform its GBTC into a Bitcoin spot ETF.
Alternatively, the SEC would be compelled to either completely rescind the listing of Bitcoin futures ETFs or reject Grayscale’s application on the basis of a fresh argument, as outlined by Seyffart.
What alternatives does the SEC have following the Grayscale ruling?
Following the favorable ruling for Grayscale today, the regulatory body is afforded a 90-day period to either file an appeal with the U.S. Supreme Court or pursue an En banc review, a process wherein a complete circuit court can overturn a decision made by a panel of three judges.
Nevertheless, the SEC’s subsequent course of action remains uncertain.
Should the SEC choose not to appeal, the court will be required to outline the implementation of its ruling, which might encompass directing the SEC to grant approval for Grayscale’s application or, at a minimum, reevaluate it.
In either scenario, Seyffart identified only two feasible choices accessible to the regulatory body.
The initial choice involves the regulator admitting defeat and granting permission for Grayscale to transform its GBTC into a Bitcoin spot ETF.
On the other hand, the SEC would have to either entirely rescind the listing of Bitcoin futures ETFs or decline Grayscale’s application based on a novel argument, as pointed out by Seyffart.
Nonetheless, according to fellow Bloomberg ETF analyst Eric Balchunas, the possibility of the SEC rescinding Bitcoin futures ETFs is deemed “extremely improbable,” given the SEC’s purported willingness to consider Ethereum futures ETFs.