The U.S. securities regulator has apparently missed a deadline to appeal a court ruling against its rejection of Grayscale’s spot bitcoin ETF application. Media reports, quoting sources familiar with the matter, unveiled ahead of the deadline that the agency was not planning to appeal the decision which potentially paves the way for the application’s review.
U.S. SEC Fails to Appeal Court Decision on Grayscale’s Application for Spot Bitcoin ETF
The U.S. Securities and Exchange Commission (SEC) has not appealed a court decision in favor of Grayscale’s bid to convert its bitcoin trust (GBTC) to a spot bitcoin exchange-traded fund (ETF). The crypto asset manager had challenged the SEC’s move to deny the conversion. The regulator had 45 days to file an appeal and hasn’t done so at the time of writing.
Earlier on Friday, people with knowledge of the situation, quoted by Reuters and Bloomberg, revealed before the midnight deadline that the Commission did not plan to appeal the late-August decision of the U.S. Court of Appeals for the District of Columbia Circuit which overturned the SEC’s rejection of Grayscale’s attempt.
Grayscale sued the SEC arguing that as the regulator had previously approved some surveillance agreements to prevent fraud in bitcoin futures ETFs, the same approach should apply to its spot bitcoin ETF, since both types of funds rely on the price of bitcoin. The Circuit judge presiding over the Grayscale-SEC case described the Commission’s denial as “arbitrary and capricious” as the agency had failed to explain the different treatment of similar products.
With a spot bitcoin ETF, investors would gain exposure to the leading cryptocurrency without the need to own it. The crypto industry and financial market players have been trying to obtain regulatory approval for this type of offering.
While the U.S. SEC greenlighted ETFs holding bitcoin futures in 2021, it is yet to give the nod to a spot bitcoin ETF. After rejecting such applications in the past, this year the securities regulator accepted for review several proposals including that of financial powerhouse Blackrock.
However, the Commission has postponed its final say on a number of applications. In September, the SEC delayed its decisions on those of Blackrock, Valkyrie, Bitwise, Invesco, Ark 21shares, Global X, and others. It had deferred its judgement on seven funds, including those of Wisdomtree, Vaneck, and Fidelity, at the end of August. The SEC has until next year to make up its mind.
In the case with Grayscale, the appeals court is expected to issue a mandate specifying how its decision should be executed, which may include instructing the SEC to revisit the company’s application, Reuters noted in its report. Bloomberg analyst James Seyffart commented in a tweet that dialogue between the applicant and the regulator should begin next week.
What are your thoughts on the future of spot bitcoin ETFs in the United States? Share them in the comments section below.
