The United States Securities and Exchange Commission (SEC) is approaching the deadline to consider Grayscale Investments’ application for a spot Bitcoin fund, following a court ruling in favor of the fund manager. While an appeal by the SEC is seen as unlikely, analysts suggest that there are still potential avenues for the regulator to delay approval of Grayscale’s spot Bitcoin ETF conversion.
On October 13, the SEC must decide among three options: appealing the D.C. Circuit Court of Appeals decision to the U.S. Supreme Court, requesting a review of the Appeals Court’s ruling, or adhering to the court’s August order to evaluate Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. Bloomberg ETF analyst Eric Balcunas expressed skepticism about an appeal, stating:
“We think [an] appeal is a longshot […] But there’s always a chance of something else happening.”
Fellow Bloomberg ETF analyst James Seyffart also suggested that the SEC’s attempt to deny the application on new grounds was improbable, but the SEC could still “find ways to keep delaying.”
A September note from law firm Ropes & Gray highlighted the possibility of the GBTC application being sent back for review to the SEC, potentially leading to another rejection based on different grounds. In such a scenario, Grayscale could appeal this new denial to the D.C. Circuit.
Ropes & Gray also outlined another potential delay scenario, wherein the New York Stock Exchange would need to file a new listing application for GBTC. In this case, the SEC could take up to eight months to reach a decision on the ETF. Notably, there are currently at least seven spot Bitcoin ETF applications pending before the SEC, with most facing delays and approval deadlines likely extending to March 2024 or beyond.
The focus is primarily on Grayscale’s spot Bitcoin ETF conversion application, as its approval could set a precedent for other applications. Bloomberg analysts have updated the likelihood of an approved spot Bitcoin ETF, indicating a 75% chance for approval this year, with the odds increasing to a 95% likelihood of approval by the end of 2024.
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