Grayscale Unsure If It Must Refile for Spot Bitcoin ETF After Landmark SEC Win

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Grayscale is unsure whether it needs to refile its Bitcoin ETF application with the Securities and Exchange Commission following its landmark legal win over the watchdog on Aug. 29, CEO Michael Sonnenshein told Bloomberg Television in an interview.

Grayscale’s win sparked gains for Bitcoin and the rest of the cryptocurrency market and was heralded as another breakthrough for an industry grappling to fend off the SEC’s regulation-by-enforcement strategy. Sonnenshein told Bloomberg that the crypto asset manager awaited the court’s final decision, and that the SEC has 45 days from the day of the ruling to appeal.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that the SEC’s earlier decision to reject Grayscale’s application to convert GBTC into a spot Bitcoin ETF listed on the New York Stock Exchange’s Arca market was “arbitrary and capricious.” It agreed that Grayscale’s proposed Bitcoin ETF was “materially similar” to Bitcoin futures exchange-traded products already approved by the SEC.

Grayscale Undecided After Win Against SEC

While the Tuesday ruling was a significant win for the cryptocurrency industry, it does not guarantee that the SEC will approve any ETF applications. In a post on X, formerly Twitter, Sonnenshein had said the company’s legal team was reviewing the court’s ruling.

🚨 JUST IN 🚨

The D.C. Circuit ruled in favor of @Grayscale in our lawsuit challenging the SEC's decision to deny $GBTC's conversion to an ETF!

Thank you to everyone who has been on this journey with us, especially our investors. We are grateful for your support and…

— Sonnenshein (@Sonnenshein) August 29, 2023

GBTC shares rallied by double-digits on Tuesday after the ruling and outperformed Bitcoin. The gains have since reversed and it’s now down 4% with shares still trading at a discount.

Crypto Market Braces For SEC’s Decision On Next Bitcoin ETF Applications

The cryptocurrency market is eagerly awaiting the next course of action from the SEC regarding Bitcoin ETF applications. The regulator is facing deadlines to decide on seven spot Bitcoin ETF applications.

The earliest decision is on September 1, when investment company Bitwise will hear whether its Bitcoin ETF has been approved, rejected, or postponed. On September 2, the SEC will also decide on the applications made by BlackRock, Fidelity, Invesco, VanEck, and Wisdomtree. Another decision will be made on September 4 on Valkyrie’s application.

The commission has rejected or delayed its decision on all spot Bitcoin ETF applications so far. In 2021, the commission said that spot Bitcoin ETFs can be manipulated. It has though approved Bitcoin futures ETFs.

Senior ETF analyst at Bloomberg, Eric Balchunas, has said there is now a 75% chance that the SEC will approve a spot Bitcoin ETF by the end of this year, up from 65% before the Grayscale ruling.

NEW: @JSeyff & I are upping our odds to 75% of spot bitcoin ETFs launching this yr (95% by end of '24). While we factored Grayscale win into our prev 65% odds, the unanimity & decisiveness of ruling was beyond expectations and leaves SEC w "very little wiggle room" via @NYCStein pic.twitter.com/IyEGmWjuHa

— Eric Balchunas (@EricBalchunas) August 30, 2023

“The unanimaty & decisiveness of ruling was beyond expectations and leaves SEC w ‘very little wiggle room,”’ he tweeted.

The US House Financial Services Committee Chairman, Patrick McHenry, has called for the ouster of the SEC’s chair, Gary Gensler.

SEC Chair @GaryGensler's crusade against the digital asset ecosystem is falling apart under scrutiny from the courts.

This is yet another example of why a comprehensive regulatory framework, like the FIT for the 21st Century Act, must be made law.https://t.co/HI3wkFAsMm

— Patrick McHenry (@PatrickMcHenry) August 29, 2023

McHenry said the court ruling illustrated why a comprehensive regulatory framework is needed for the crypt industry.

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