The United States Securities and Exchange Commission (SEC) is running out of time to appeal a court decision that ruled in favor of Grayscale Investments, forcing the regulator to review the fund manager's application for a spot Bitcoin (BTC) fund. While it is unlikely that the SEC will appeal, analysts believe there are still ways for the regulator to delay the approval of Grayscale's spot Bitcoin ETF conversion.
Deadline Approaching
The SEC must make a decision by October 13th. The options are to appeal the court's decision to the U.S. Supreme Court, request a revisit of the ruling, or review Grayscale's bid to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, as ordered by the court in August.
Eric Balcunas, an ETF analyst at Bloomberg, believes an appeal is unlikely but acknowledges that there could be other hurdles. He stated, "We think [an] appeal is a longshot [...] But there's always a chance of something else happening."
Another Bloomberg ETF analyst, James Seyffart, agrees that an SEC attempt to deny on new grounds is unlikely, but the regulator could still find ways to delay the process.
Possible Delays
Law firm Ropes & Gray suggests that the GBTC application could be sent back to the SEC for review, providing the regulator with another opportunity to reject it on different grounds. This could result in another appeal by GBTC to the D.C. Circuit.
The firm also mentions a scenario where the New York Stock Exchange has to file a new application to list GBTC, potentially leading to an eight-month delay in the SEC's decision on the ETF.
Implications for Other Applications
There are currently at least seven spot Bitcoin ETF applications awaiting approval from the SEC. These applications have faced delays, pushing their final approval deadlines to around March 2024 or later. However, all eyes are on Grayscale's spot Bitcoin ETF conversion application, as its approval could set a precedent for other applications.
Chances of Approval
Bloomberg analysts believe there is a 75% likelihood of an approved spot Bitcoin ETF this year, which increases to 95% by the end of 2024, following Grayscale's court win.
