What are the implications if the SEC chooses not to contest the Grayscale spot Bitcoin ETF decision?

The United States Securities and Exchange Commission is approaching its deadline to contest the court ruling that favored Grayscale Investments, compelling the agency to reassess the fund manager’s proposal for a spot Bitcoin (BTC) fund.

While numerous analysts do not anticipate that the securities regulator will seek to contest the court’s ruling, they suggest there may still be avenues for the SEC to postpone the approval of Grayscale’s spot Bitcoin ETF conversion.

By October 13, the SEC must either appeal the decision of the D.C. Circuit Court of Appeals to the U.S. Supreme Court, ask the Appeals Court to reconsider its ruling, or comply with the court’s August directive and evaluate Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

In a post dated October 12, responding to a question from an X user, Bloomberg ETF analyst Eric Balcunas indicated that an appeal was improbable, although he noted that other obstacles could still arise.

“We think [an] appeal is a longshot […] But there’s always a chance of something else happening.”

In a separate commentary, fellow Bloomberg ETF analyst James Seyffart remarked that an SEC effort to deny on new grounds was unlikely and would be a “very difficult needle to thread,” but suggested that the agency could “find ways to keep delaying.”

Not officially. SEC could attempt to deny on new grounds but as @EricBalchunas, myself, @NYCStein, @SGJohnsson, @NateGeraci and many others have said. It would be a very difficult needle to thread and we view as unlikely. They can find ways to keep delaying though IMO.

— James Seyffart (@JSeyff) October 12, 2023

A note from the law firm Ropes & Gray in September cautioned that the GBTC application might be returned to the SEC for further review, providing the regulator another opportunity to reject it on a different basis.

“In this scenario, the new denial could itself then be subject to another appeal by GBTC to the D.C. Circuit,” the firm stated.

Another potential delay, according to Ropes & Gray, could occur if the New York Stock Exchange is required to submit a new filing to list GBTC — in which case the SEC might take up to eight months to arrive at a decision regarding the ETF.

Related: House committee chairman threatens SEC chair with subpoena, but not over crypto

At present, there are at least seven spot Bitcoin ETF applications pending approval from the regulator.

Although all were submitted to the regulator earlier in 2023, each has encountered delays and setbacks from the SEC, with most final approval deadlines now projected for around March 2024 or later.

Nevertheless, significant attention is focused on Grayscale’s spot Bitcoin ETF conversion application, as SEC approval could complicate the agency’s ability to deny other applications.

Bloomberg analysts have assigned a 75% probability to the approval of a spot Bitcoin ETF this year, a figure that rises to a 95% likelihood of approval by the end of 2024 following Grayscale’s court victory.

Magazine: Web3 Gamer: Apple to fix gaming? SEC hates Metaverse, Logan Paul trolled on Steam