SEC Has Limited Time to Respond to Grayscale’s Court Victory
The Securities and Exchange Commission (SEC) has a few hours left to respond to a recent court decision in favor of Grayscale. The court ruled that the SEC was being arbitrary and capricious in rejecting Grayscale’s bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF while approving similar futures Bitcoin ETFs.
Bloomberg ETF analyst Eric Balcunas predicted that the SEC won’t appeal the decision, although there is still time for them to do so. However, the SEC has not made any statements regarding the matter yet.
The Fate of GBTC Conversion
If the SEC doesn’t take any action before midnight, it doesn’t automatically mean that the application to convert GBTC into a spot Bitcoin ETF will be approved. Instead, the court will likely provide guidance on how to respond to its ruling. This could involve revisiting the application or finding different justifications for denial or simply approving Grayscale’s application.
GBTC Share Value and Discount
As the deadline approaches, GBTC shares are trading at $20.24, showing a modest 1% increase in the past 24 hours. Approximately 2.2 million shares have been traded in the past day compared to almost 20 million shares traded on the day of Grayscale’s court victory.
The discount on GBTC shares is currently around 15%. This discount represents the difference between the total market value of all outstanding GBTC shares and the net asset value of Bitcoin held by Grayscale.
Potential Windfall for Investors
If approved as a spot Bitcoin ETF, GBTC shares would be directly redeemable for BTC held by Grayscale. This would bring Grayscale’s share value in line with the value of its Bitcoin, resulting in a significant windfall for investors.
SEC’s History with Spot Bitcoin ETFs
The SEC has consistently rejected spot Bitcoin ETF applications. However, doubts about Grayscale’s chances of conversion have caused the share discount to narrow. It reached as low as 48% in December 2022 but has since decreased.
Grayscale’s Other Conversion Attempts
In addition to GBTC, Grayscale is also seeking to convert its Ethereum Trust into a spot Ethereum ETF. The SEC recently approved the first futures Ethereum ETFs.
Hot Take: SEC Faces Deadline in Responding to Grayscale’s Victory
The SEC has limited time to respond to the court ruling in favor of Grayscale. If the SEC doesn’t appeal the decision, it could have significant implications for the approval of Grayscale’s bid to convert GBTC into a spot Bitcoin ETF. This could potentially bring Grayscale’s share value up and create a windfall for investors. The SEC’s history with spot Bitcoin ETF applications and recent court losses suggest that the tide may be turning in favor of crypto investment products. Ultimately, the response from the SEC will determine the future of GBTC and potentially set a precedent for other crypto ETF applications.
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