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- 1 A Federal court ruled in favor of Grayscale and asked the SEC to recheck the rejection criteria.
- 2 The first deadline for approval or rejection of Bitcoin ETF is January 10, 2024.
Grayscale won the case to convert GBTC to a Bitcoin Spot ETF but Berenberg suspects the SEC could prepare other arguments to reject it. The regulatory agency has rejected GBTC requests, forcing it to file a lawsuit. On August 30, 2023, Grayscale won the lawsuit while the court denied SEC’s points.
SEC Might be Preparing for Counter Action Against Grayscale Win
When a federal court ordered the SEC to review the rejection criteria for Grayscale Bitcoin Spot ETF, the market rejoiced, and Bitcoin price surged around 8% but fell considerably in the following sessions. The win also reignited hopes for a Bitcoin Spot ETF but a German Investment Bank, Berenberg, thinks differently.
Industry experts agree that the approval of Bitcoin spot ETF could be a game changer, allowing exposure to a broader range of audience. Institutional and retail investors will have a chance to leverage the growing market. Also, market participants will have the opportunity to invest in cryptocurrency without buying them.
The United States Court of Appeals for the D.C. Circuit has asked the SEC to reanalyze the arguments on which GBTC’s appeal was rejected in the past. Ironically, the SEC has accepted a futures-based Bitcoin product but has rejected Bitcoin spot products as they are nearly identical.
It should be known that the court has not compelled the SEC to approve GBTC’s request; they are only requested to rethink specific points. However, experts suspect the agency might try to come up with some counterargument to reject the request.
Options Available for the SEC
SEC has the following options: they can appeal the case in a similar or higher court. If the agency appeals, the recent decision will be put on hold for 45 days. During this, a resolution should be reached or the SEC has to decide its stance.
The second option is to approve a few or all of the nine ETF applications currently in line. They can also approve Grayscale’s request and keep others on hold. Interestingly, Cathie Wood’s ARK Invest also applied to Bitcoin spot ETF which was approved and published in the Federal Register on May 15, 2023; giving SEC a time limit of 240 days, ending on January 10, 2024, to accept or reject the request.
How will Bitcoin Spot ETF Affect the Market?
The world’s biggest asset manager, BlackRock, entered the Bitcoin ETF race when the regulatory crackdown by the SEC against the crypto industry was in full swing. During the same period, Fidelity and others also entered the race. The possible approval of Bitcoin ETF will allow retail and interested investors to invest in Bitcoin without buying BTC.
Experts hint that this would allow capital influx in the ecosystem and should positively affect the BTC price. Also, Bloomberg’s senior ETF analyst claimed that the top-performing 15 equity ETFs of 2023 have profound crypto connections. Analysts claim that the BTC price could cross $150,000 after the United States approves Bitcoin ETF.
Europe has already launched its first Bitcoin ETF BCOIN on Euronext, Amsterdam. However, the BTC price remained essentially unchanged at the time. But a similar scenario might not be repeated when the U.S. SEC approves a Bitcoin ETF. The United States is a vast market; any change here is reflected worldwide.
Adarsh Singh is a true connoisseur of Defi and Blockchain technologies, who left his job at a “Big 4” multinational finance firm to pursue crypto and NFT trading full-time. He has a strong background in finance, with MBA from a prestigious B-school. He delves deep into these innovative fields, unraveling their intricacies. Uncovering hidden gems, be it coins, tokens or NFTs, is his expertise. NFTs drive deep interest for him, and his creative analysis of NFTs opens up engaging narratives. He strives to bring decentralized digital assets accessible to the masses.
