As we know, Grayscale Investments has won a legal victory against the US Securities and Exchange Commission (SEC) in its case for a spot Bitcoin ETF.
Unfortunately, it remains uncertain whether the SEC will approve the conversion of the Grayscale Bitcoin Trust.
See below for full details.
Grayscale’s court battle: the unknown about the approval of the ETF Bitcoin Trust
As expected, Grayscale Investments has won a legal victory against the US Securities and Exchange Commission (SEC) over its application for a spot exchange-traded fund (ETF) on bitcoin.
However, the possibility of the SEC converting the Grayscale Bitcoin Trust (GBTC) is largely out of the court’s control.
According to Eric Balchunas, senior ETF analyst at Bloomberg, the court does not have the power to require the SEC to take this action, although a federal appeals court has previously ruled that the SEC should consider Grayscale’s request.
Balchunas said the SEC still retains some control over its decision, so the potential solution proposed by Grayscale may not be implemented immediately.
There is also a possibility that the SEC could use legal arguments to make Grayscale wait before making a decision on the application.
Scott Johnsson, General Partner and General Counsel of Van Buren Capital, suggested that it may be easier for Grayscale to resubmit its application, which would be the path of least resistance for the company.
As we know, Grayscale has been seeking approval to launch a spot ETF on Bitcoin since October 2021, a goal shared by other major financial players such as BlackRock.
However, the SEC has consistently rejected such requests from other issuers, citing concerns about the cryptocurrency market and investor protection.
However, the SEC has approved bitcoin futures-based ETFs, which allow investors to access futures contracts linked to the asset, rather than the cryptocurrency itself.
Summary
Ark Invest and 21Shares working with SEC on Bitcoin ETF approval
Recently, Cathie Wood, CEO of ARK Invest, revealed in an interview with CNBC that 21Shares, ARK Invest’s partner, is working closely with the US Securities and Exchange Commission (SEC) to gain approval for a bitcoin exchange-traded fund (ETF).
Wood explained that the SEC has shown a change of attitude towards Ark Invest’s bitcoin spot ETF application.
In particular, it appears that regulators have begun to ask questions, to which Ark Invest and 21Shares have responded in detail in a five-page response.
Although interest in ETFs is growing, Wood stressed that investors should take the time to understand this new asset class.
He also pointed out that SEC approval of a bitcoin ETF could be a significant catalyst for institutional investment in bitcoin.
As we know, the SEC recently approved nine Ethereum futures ETFs. However, analysts suggest that investors may prefer spot cryptocurrency ETFs.
The approval of a spot bitcoin ETF would make it easier for institutional investors to access Bitcoin, potentially bringing more liquidity to the market.
As a reminder, the deadline for the SEC’s decision on Ark 21Shares’ spot bitcoin ETF is 10 January 2024.
Fidelity’s bitcoin ETF application also renewed: Approval imminent?
On Tuesday, Fidelity Investments filed a new application with the SEC for its bitcoin exchange-traded product, “the Wise Origin Bitcoin Trust”. In doing so, Fidelity sought to address the regulator’s earlier concerns that led to the rejection of its previous application for a bitcoin ETF.
The Boston-based firm had originally applied for a bitcoin cash fund in 2021, but this was rejected by the SEC in January 2022.
As we noted, the SEC has rejected many bitcoin ETF applications in recent years due to concerns about market manipulation and lack of shared oversight.
In June 2023, BlackRock’s statement encouraged Fidelity and other institutions, including Invesco, WisdomTree, Valkyrie and Bitwise, to reformulate their bitcoin ETF applications.
BlackRock’s landmark announcement also helped drive the price of bitcoin to a one-year high of $30,000.
Wall Street’s enthusiasm suggests that a spot bitcoin ETF is likely to be approved in the near future. Should this happen, it is expected to have a positive impact on the price of bitcoin and the cryptocurrency market as a whole.
However, it is important to note that false news about the approval of BlackRock’s bitcoin ETF recently circulated, raising concerns about market manipulation. On Monday, news of BlackRock’s approval went viral on social media, but was later retracted and excused as a publishing error.
Despite the misinformation, bitcoin briefly rose to $29,000, demonstrating public interest in the approval of a spot bitcoin ETF.
Unsurprisingly, some believe that such misinformation may have been used to manipulate the price of Bitcoin.
