Grayscale Wins Lawsuit Against SEC, But GBTC Conversion Still Uncertain
Grayscale Investments has emerged victorious in its lawsuit against the U.S. Securities and Exchange Commission (SEC) regarding its Bitcoin spot exchange-traded fund (ETF) application. However, despite the legal victory, it remains uncertain whether the SEC will convert Grayscale Bitcoin Trust (GBTC).
In an October 18 Twitter thread, Senior ETF analyst at Bloomberg, Eric Balchunas, highlighted that it is not within the court’s power to require the SEC to convert GBTC, even though a federal appeals court previously ruled that the SEC must reconsider Grayscale’s application. Balchunas also suggested that there is a “decent chance” that the SEC will make Grayscale refile its application using legal reasoning.
Scott Johnsson, General Partner and General Counsel at Van Buren Capital, also believes that Grayscale may end up refiling its application as the path of least resistance.
The Struggle for a Bitcoin Spot ETF
Grayscale has been striving to launch a spot Bitcoin ETF since October 2021. Other financial giants like BlackRock have also filed applications for spot Bitcoin ETFs. However, the SEC has consistently rejected such applications from various issuers, citing concerns about the crypto market and investor protection. Interestingly, the SEC has approved Bitcoin futures ETFs that provide access to futures contracts instead of the actual asset.
Hot Take: Uncertainty Remains for Grayscale’s GBTC Conversion
While Grayscale Investments achieved a legal victory against the SEC over its Bitcoin spot ETF application, uncertainty still surrounds whether the SEC will allow the conversion of Grayscale Bitcoin Trust (GBTC). The court does not have the power to require the SEC to convert GBTC, leaving it up to the agency’s discretion. Analysts speculate that the SEC may make Grayscale refile its application, prolonging the process. Despite this setback, Grayscale and other financial giants continue to pursue the establishment of spot Bitcoin ETFs, while the SEC has shown favor towards Bitcoin futures ETFs. The battle for a Bitcoin spot ETF remains ongoing.
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