It appears that the American securities regulator missed the deadline to file an appeal against a court decision that rejected Grayscale's request for a spot bitcoin ETF. Before the deadline, media reports citing insiders with knowledge of the situation revealed that the agency had no plans to challenge the ruling, perhaps opening the door for a reassessment of the application.
U.S. SEC Fails to Appeal Court Decision on Grayscale’s Application for Spot Bitcoin ETF
A court's verdict in favor of Grayscale's application to turn its bitcoin trust (GBTC) into a spot exchange-traded fund (ETF) has not been challenged by the U.S. Securities and Exchange Commission (SEC). The SEC's decision to deny the conversion had been contested by the cryptocurrency asset management. The regulator had 45 days to file an appeal, but as of this writing, she hasn't.
Before the deadline passed at midnight on Friday, Reuters and Bloomberg were able to confirm that the Commission had no intention of appealing the SEC's decision to reject Grayscale's application, which had been reversed by the U.S. Court of Appeals for the District of Columbia Circuit in late August.
Grayscale filed a lawsuit against the SEC, claiming that since both types of funds depend on the price of bitcoin, the regulator should have approved some surveillance agreements to avoid fraud in bitcoin futures ETFs. The Commission's decision was deemed "arbitrary and capricious" by the Circuit court presiding over the Grayscale-SEC case because the agency failed to explain why similar items were treated differently.
Investors might acquire exposure to the most popular cryptocurrency without really owning it with a spot bitcoin ETF. Players in the financial sector and the cryptocurrency business have been working to get regulatory approval for this kind of service.
While the U.S. SEC approved ETFs that held bitcoin futures in 2021, it has not yet approved an ETF that holds actual bitcoin. After previously rejecting such applications, the securities regulator this year accepted a number of bids, including one from financial behemoth Blackrock, for assessment.
But the Commission has put off making a final decision on a few applications. The SEC postponed making determinations in September regarding Blackrock, Valkyrie, Bitwise, Invesco, Ark 21shares, Global X, and other companies. At the end of August, it had postponed making a decision on seven funds, including those from Wisdomtree, Vaneck, and Fidelity. The SEC has until the following year to make a decision.
According to Reuters, the appeals court in the Grayscale case is anticipated to issue a mandate outlining how its ruling should be carried out, which may include directing the SEC to review the company's application. A tweet from Bloomberg analyst James Seyffart stated that the applicant and regulator should start talking next week.
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