SEC Faces First Wave of Deadlines for Seven Bitcoin Spot ETF Decisions

The U.S. Securities and Exchange Commission (SEC) is confronting its initial deadlines to rule on seven applications for spot Bitcoin (BTC) exchange-traded funds (ETFs). The latest decision is due on September 4, following the regulator’s loss to Grayscale Investments in a U.S. federal appeals court.

According to several SEC filings, investment firm Bitwise will learn whether its ETF receives approval on September 1. Meanwhile, BlackRock, VanEck, Fidelity, Invesco, and Wisdomtree are awaiting the SEC’s decision for their respective funds by September 2. Valkyrie is scheduled to receive a response from the SEC on September 4.

List of recent Bitcoin spot ETF applicant filing dates and deadlines. Source: Bloomberg

On August 29, the U.S. Court of Appeals ruled that the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was “arbitrary and capricious.” However, this ruling does not guarantee that the SEC must approve Grayscale’s application or those of other applicants in the future, according to Bloomberg ETF analyst James Seyffart.

In an August 29 interview with Bloomberg, Seyffart explained that Grayscale’s victory “definitely” increases the likelihood of a successful outcome for the next wave of applicants.

Seyffart noted uncertainty regarding when that outcome will occur, as the SEC has the ability to delay its decisions. The regulator has two additional proposed deadlines for each fund before being compelled to make a final decision on the 240th day after the filing.

For the applicants currently awaiting a decision, the final deadlines for the SEC are all scheduled for mid-March of the following year.

99.99999% of the world doesn't know that the SEC has to decide on 7 BTC ETFs within the next 3 days:
-blackrock
-bitwise
-vaneck
-wisdomtree
-invesco
-fidelity
-valkyrie
the suits at our doorstep

— odin free (@odin_free) August 29, 2023

What are the SEC’s options post-Grayscale decision?

Following the August 29 ruling in favor of Grayscale, the regulator has 90 days to file an appeal with the U.S. Supreme Court or request an en banc review, in which a full circuit court can overturn a ruling made by a three-judge panel.

However, the SEC has not yet clarified its next move.

If the SEC does not appeal, the court will need to specify how its ruling is executed. This could include instructing the SEC to approve Grayscale’s application or, at the very least, to revisit it.

Related: BTC price jumps to 2-week highs on Grayscale vs. SEC Bitcoin ETF win

Seyffart identified only two viable options for the regulator.

The first option is for the SEC to concede defeat and approve Grayscale’s conversion of its GBTC into a Bitcoin spot ETF.

Alternatively, the SEC would need to revoke the listing of Bitcoin futures ETFs entirely or deny Grayscale’s application based on a new argument, Seyffart said.

The second potential avenue is to deny on reasons not used before/yet… which i have been saying for months could have to do with Custody or settlement of #Bitcoin which is not something that futures ETFs have to worry about. SEC has made a lot of noise around custodians

— James Seyffart (@JSeyff) August 29, 2023

However, fellow Bloomberg ETF analyst Eric Balchunas considered the odds of the SEC revoking the Bitcoin futures ETFs to be “highly unlikely” due to the SEC’s reported openness to Ethereum futures ETFs.

Lol, this guy turned the last paragraph of Judge Rao's legal smackdown today into an MGMT-esque sythe banger. Really captures the mood rn, well done.. https://t.co/BBJZR5O6To

— Eric Balchunas (@EricBalchunas) August 29, 2023

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