SEC courtroom loss could lead to Bitcoin ETF

The securities watchdog’s Gary Gensler may be losing his fight against all things cryptocurrency

A US federal judge recently ruled against the Securities and Exchange Commission’s (SEC) decision to reject an exchange-traded fund (ETF) from Grayscale Investments via its Bitcoin Trust. However, experts say the court ruling will not automatically pave the way for the country’s first spot Bitcoin ETF.

An August 29 decision by DC federal Court of Appeals Judge Neomi Rao supported Grayscale’s stance that the Bitcoin ETF is “materially similar” to Bitcoin futures products already authorized by the SEC. The court ruled that the SEC’s rationale in denying Grayscale’s Bitcoin ETF because it wasn’t “designed to prevent fraudulent and manipulative acts and practices” was inadequate, with the matter set to be sent back to the SEC for review.

The SEC has rejected all US spot crypto ETF offerings, with various applications currently under review from several companies, including ARK Invest, BlackRock, Wisdom Tree, Bitwise Asset Management, VanEck, Invesco, Galaxy Digital, Fidelity, and Valkyrie. The SEC could keep delaying a decision or push the final approval deadline for the applications to March 2024.

“Despite the inevitable SEC appeal, to our mind, there is no doubt now, spot BTC ETFs are coming to the US,” stated CEO of ETC Group Tim Bevan. “We don’t believe the SEC will act as kingmaker, and the most likely outcome is a block approval of applications that meet requirements, probably in Q1 ’24.”

Grayscale can refile with the SEC, making the application more similar to a Bitcoin futures-linked ETF. The SEC also has the option to file for an “en banc” hearing involving all DC Circuit judges instead of the three that ruled on the Grayscale appeal.

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