SEC And Grayscale Initiate Discussions To Potentially Approve BTC ETF

The United States Securities and Exchange Commission (SEC) has initiated discussions with Grayscale Investments, exploring the possibility of transforming the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF (Exchange Traded Fund).

This development follows the recent legal victory Grayscale attained against the SEC, which could have a significant impact on the cryptocurrency market and make Bitcoin (BTC) more accessible to ordinary investors.

Renewed scrutiny

The ongoing talks between Grayscale and the Division of Trading and Markets, as well as the Division of Corporation Finance, stem via a federal court ruling that criticized the initial rejection put forth by the SEC concerning the ETF application as arbitrary and capricious. This court decision has revived the prospect of a spot Bitcoin ETF and subjected the application to renewed SEC scrutiny.

Grayscale Chief Legal Officer Craig Salm reaffirmed the idea that the company will happily collaborate with the Division of Trading and Markets. He acknowledges persistent challenges but remains hopeful, citing the progress made by other financial giants like BlackRock and Fidelity in their Bitcoin ETF applications. Craig stated that the discussions have been positive, and that it is now a matter of when, not if, the application will be accepted.

Hope still remains

While the SEC has not publicly commented on these discussions, there are elevated expectations and scrutiny. SEC Chair Gary Gensler has not discussed the application specifically but nevertheless underscored the role the agency has in handling evolving technology and business models, which will be pivotal in evaluating all ETF applications.

According to ETF analysts James Seyffart and Eric Balchunas, there is a high probability of Bitcoin ETF approval by January 10th, 2024, even if approvals are not granted this month. So far, the SEC has issued delay orders for companies like BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity, and Valkyrie simultaneously.

Still, it is likely that the agency will permit all applicants to launch, especially given the recent court victory that Grayscale secured. Elsewhere, many banks like JPMorgan have suggested that the SEC could face legal challenges if it does not approve these applications, and some policy experts criticize the commission for potentially overstepping its authority.