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- 1 The US Securities and Exchange Commission (SEC) has no plans to support the court’s decision on Grayscale Bitcoin ETF.
- 2 Grayscale Investment requested the DC Circuit Court to convert the Grayscale Bitcoin Trust (GBTC) into an ETF.
An announcement from the SEC’s office on October 14, 2023, came with disappointments to Grayscale Investments, an American digital currency asset management firm. The conclusion was not to support the court’s decision on Grayscale Bitcoin ETF and requires a revision from the firm’s application.
What Grayscale applied for and why is the SEC not supporting the application? Let’s uncover the whole scenario in depth.
Court’s Decision to Favor Grayscale Investments
Grayscale Investments is one of the leading American digital currency asset management companies and digital currency groups, introduced in 2013. The company submitted an application to the DC Circuit Court to transform the GBTC into an Exchange-traded fund (ETF).
After several debates and hearings, On October 13, the DC Court finally made a decision in favor of Grayscale Investments. However, the SEC is not in support of the decision which is falling in Grayscal’s pool. The ruling requires the SEC to review the application requested by Grayscale.
An EFT is a basket of securities that tracks an underlying index and contains investments including bonds and stocks. Simply, an ETF is SEC-registered and offers investors a chance to pool their assets in a fund that invests in bonds and stocks. To become an ETFcertified, Grayscale Investments submitted an application which finally got approval from the court but not by SEC.
The SEC’s expected decision not to appeal the Court decision is likely to pave the way for the agency to review Grayscale’s application. Privacy and security of investors from market manipulation is one of the main reasons behind the denial. As per the SEC’s point of view, a spot Bitcoin ETF offers investors with exposure to the world;d biggest cryptocurrency by market cap without actually owning it. Keeping the risk in mind, the SEC denied all spot ETF applications including Grayscale.
What SEC is Planning?
According to the SEC, Grayscale’s application for adopting an ETF does not show any kind of protection for the investors from market manipulation which can lead to higher risks.
In addition, the SEC is not going to appeal to the Supreme Court but this doesn’t mean that Grayscal’s application is approved, as per Bloomberg analysts. Considering all the situations, the SEC is not in the mood to follow the court’s order and will review the application to change GBTC into a spot Bitcoin ETF.
James Seyffart, Bloomberg ETF analyst expecting an action from the SEC’s office next week. Around seven spot Bitcoin ETF applications are pending in the SEC’s folder awaiting a decision from the regulatory.
“There are 90% chances that ETF’s application will get approved by January 2024, mainly applications from Cathie Wood’s ARK invest” stated James Seyffart. One of the predictions of both analysts suggested that there is a 75% chance that an application will get approved in 2023.
Conclusion
The application of Grayscale Investment for transforming the GBTC into an ETF was approved by the court but failed to get approval from the SEC. Privacy and security of investors from market manipulation are one of the main reasons the SEC is not approving the several pending applications on spot Bitcoin ETF.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
