A federal court may formalize the ruling on Grayscale’s ETF today, officially vacating the SEC’s refusal to convert the GBTC.
A federal court is set to formalize Grayscale Investments’ victory over the United States Securities and Exchange Commission (SEC) over the firm’s conversion of the GBTC into a spot Bitcoin exchange-traded fund (ETF). Closing the case will legally establish Grayscale’s win, especially as the SEC chose not to appeal the ruling.
Court to Formalize Grayscale Ruling
Today marks the final deadline for the DC Circuit Court of Appeals, ending the seven-day deadline from the SEC’s refusal to appeal. The court may decide to close the case without any word or direct the SEC on specific steps.
Grayscale had applied to convert its Bitcoin trust to an ETF and was rejected by the SEC. Following the court win, the general expectation is that the SEC would approve the spot Bitcoin ETF application. However, this is not certain as the Commission could still deny the proposal for other reasons. In a statement, Grayscale Investments spokeswoman Jennifer Rosenthal said:
“Grayscale remains operationally ready to convert GBTC to an ETF, and on behalf of GBTC’s investors, we look forward to working collaboratively and expeditiously with the SEC on these matters.”
Grayscale is furthering efforts to turn its GBTC into a spot Bitcoin ETF and has submitted a new filing to the SEC. Upon approval, the ETF would list on the New York Stock Exchange (NYSE) Arca and trade under the GBTC ticker symbol. The announcement corroborates Rosenthal’s comment, adding that the “GBTC is ready to operate as an ETF” upon approval. Grayscale also said that it is ready to collaborate with the SEC.
Spot Bitcoin ETF Only a Matter of Time
In August, the court turned down the SEC’s rejections of Grayscale’s application. According to the court, the Commission could not “adequately explain” why it rejected Grayscale’s application but approved two other Bitcoin futures ETPs” (exchange-traded products). The court added that it finds the “unlike regulatory treatment” unlawful and vacated the Commission’s order.
Most people now believe that a spot Bitcoin ETF approval is only a matter of time. Following Grayscale’s victory, the consensus is that the SEC no longer has a reason to continue rejecting spot Bitcoin ETF proposals.
Galaxy Digital CEO and founder Mike Novogratz said the SEC will likely approve a spot Bitcoin ETF before 2023 runs out. In a recent interview, Novogratz said that the American public wants Bitcoin ETFs and might be putting pressure on the SEC. The CEO also added that the SEC’s loss against Galaxy Digital is the “most significant piece.” Pointing out that the court has dismissed the SEC’s rejection, Novogratz indirectly walked back a previous estimate where he put approval for February at the latest.
JPMorgan analysts also believe that the SEC will likely approve a spot Bitcoin ETF, but did not suggest a timeline. The banking giant added that the SEC would have to “retroactively withdraw its previous approvals of futures-based Bitcoin ETFs” to continue denying Grayscale’s request to convert the GBTC.
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