The SEC’s Denial of Grayscale Bitcoin Trust Conversion
The U.S. Securities and Exchange Commission (SEC) received criticism from a U.S. appeals court for its decision to deny the conversion of the Grayscale Bitcoin Trust into the first U.S. spot ETF while allowing derivative-based ETFs. The court accused the SEC of failing to meet the standard for reasoned decision-making, leading to confusion among crypto enthusiasts and Wall Street analysts.
Alistair Milne, a well-known investor and crypto influencer, believes that SEC Chairman Gary Gensler may have a plan to restore the agency’s reputation. Gensler stated during a Senate appearance that the SEC is reviewing both the Appeals Court judgment and other Bitcoin spot ETF applications, treating all applications equally.
SEC Likely to Approve Spot ETFs?
Milne suggests that the SEC will likely approve spot ETFs from reputable operators globally, signaling that the crypto market has matured. This move would allow the SEC to emphasize that major players like Blackrock entering the market will increase trading volume, improve oversight, and reduce the risk of market manipulation. By doing so, the SEC can save face and avoid having to come up with new excuses for denying spot ETFs or retracting approvals for derivative-based ETFs.
Timing is Everything
With Wall Street preparing to embrace Bitcoin and Blackrock having a high approval rate for its ETF applications, the SEC appears to be adjusting its strategy. Milne speculates that several U.S. spot Bitcoin ETFs could be approved by mid-October if the SEC reviews its decision on the Grayscale Bitcoin Trust within 45 days. This approval could potentially trigger a new bull market, especially considering the upcoming Bitcoin halving event in April 2024.
Hot Take: A Chance for the SEC to Restore Credibility
The recent criticism faced by the SEC has put its reputation at stake. However, with the opportunity to approve spot ETFs and show that the crypto market has matured, the SEC can regain its credibility. By allowing reputable operators to enter the market and emphasizing increased oversight, the SEC can save face and avoid further lawsuits or public disgrace. The timing is crucial, as the approval of spot Bitcoin ETFs could potentially lead to a new bull market, creating positive momentum for the industry.
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