The progress on the Grayscale conversion front offers a welcome degree of clarity to the ETF approval process, which had been somewhat murky.
The crypto community has witnessed a significant milestone as recent reports indicate that the Securities and Exchange Commission (SEC) decided not to appeal a court ruling that could potentially pave the way for Grayscale Investments to convert its Bitcoin Trust into an Exchange-Traded Fund (ETF).
This development has left analysts and investors eager to understand the implications and potential future of this groundbreaking decision.
A Historic Victory for Grayscale and ETF
Grayscale Investments, a prominent crypto asset manager, secured a legal victory earlier this year when a federal court ruled in its favor to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.
The SEC, which had previously shown reluctance to approve a Bitcoin ETF, had until a recent Friday deadline to appeal the ruling. In a surprising turn of events, the agency decided not to pursue further appeals, signaling a new chapter in the crypto space investment.
James Seyffart, an analyst at Bloomberg Intelligence, predicts that the SEC is now likely to engage in discussions with Grayscale about the transition process. “We’ll get more information next week and then we’ll know what happens next,” he noted. While the regulator does have the option to file an appeal with the Supreme Court, Seyffart considers this highly unlikely.
Grayscale’s argument for the conversion of GBTC into an ETF is that it could unlock substantial value for its investors. The court’s ruling marked a momentous occasion in the crypto industry, as it rekindled hope that a US-based Bitcoin ETF could finally become a reality after a decade-long battle.
The SEC’s reluctance to approve such financial products in the past had left many wondering when this milestone would ever be reached. However, Grayscale’s victory has rekindled hope and enthusiasm.
The prospect of a Bitcoin ETF has also attracted the interest of numerous major financial institutions, including BlackRock Inc (NYSE: BLK) and Invesco Ltd (NYSE: IVZ), which are actively working to launch their own ETF products as well.
The Progression of the ETF Approval Process
The progress on the Grayscale conversion front offers a welcome degree of clarity to the ETF approval process, which had been somewhat murky. Many industry observers were uncertain about how the SEC would approach the asset manager’s proceedings, as well as other outstanding applications for Bitcoin ETFs. One of the lingering questions is whether the regulator will allow multiple Bitcoin ETFs to launch simultaneously.
Notably, Bloomberg Intelligence analysts have noted that a recent modification to an application from ARK and 21Shares indicates a “constructive conversation” with regulators, a favorable sign that frequently precedes ETF approval. According to these analysts, the SEC clearance is very likely by January 10, 2023.
Similarly, analysts at JPMorgan Chase & Co (NYSE: JPM) are also forecasting that the SEC will be compelled to approve spot Bitcoin ETF applications from various asset managers following Grayscale’s favorable court ruling.