In a pivotal development for the crypto investment community, the Securities and Exchange Commission (SEC) has chosen not to seek a rehearing regarding Grayscale Investments LLC’s proposal to convert its Bitcoin trust into a spot Bitcoin exchange-traded fund (ETF).
Following this, Eleanor Terrett, a journalist from Fox Business, acquired a statement from Grayscale on the next steps:
“The Federal Rules of Appellate Procedure’s 45-day period to seek rehearing has now passed. The Court will now issue its final mandate within seven calendar days. The Grayscale team remains operationally ready to convert GBTC to an ETF upon the SEC’s approval, and we look forward to sharing more information as soon as practicable,” a Grayscale spokesman told Terrett.
Spot Bitcoin ETF Talks Commence
Grayscale’s persistent push for its Grayscale Bitcoin Trust (ticker GBTC) conversion received significant attention earlier this year when it achieved a legal win in a federal court. This victory championed the cause for GBTC to potentially become the first US ETF to invest directly in Bitcoin. The SEC had until Friday to appeal this decision but chose not to proceed. An anonymous source revealed prior to the deadline at midnight that the SEC has no further appeals planned regarding this case.
James Seyffart, an analyst at Bloomberg Intelligence, indicated the likelihood of dialogue commencing between Grayscale and the SEC soon, sharing via X, “Dialogue between Grayscale and SEC should begin next week. Hoping for more info on next steps sometime next week or week after?” He further added, “Progress on the Grayscale conversion-front brings further clarity to the ETF-approval process.”
Grayscale has consistently maintained that converting GBTC into an ETF can potentially unlock vast value for its stakeholders. This assertion, coupled with their court win, has rejuvenated hopes in the community that a Bitcoin ETF in the US might finally become a reality.
Post Grayscale’s win in August, GBTC shares experienced an upsurge, even more so than Bitcoin. The trust’s discount to its underlying assets saw a contraction from above 45% earlier this year to below 20%. Notable investors like Ark’s Cathie Wood capitalized on this situation, acquiring GBTC shares during its high distress.
Analysts at Bloomberg Intelligence argue that there’s a 90% chance of SEC approval by around January 10.
The Race To SEC Approval
While Grayscale’s recent advancements have been closely watched, there are multiple contenders in the race to obtain the SEC’s nod for a Bitcoin ETF. As reported by Bitcoinist, ARK Invest submitted an updated version of its Bitcoin ETF prospectus last Wednesday, October 11.
This move follows the SEC’s communication to issuers, seeking clarifications on their S-1. Notably, ARK not only met its next deadline slated for January 10 but also became the inaugural entity to make such amendments. This proactive approach places ARK ahead of competitors like BlackRock, Fidelity, Invesco, and others in the quest for the US’s first spot Bitcoin ETF.
Nate Geraci, the President of ETF Store and host of the ETF Prime podcast, shared his perspective on this development: “If we assume Grayscale’s original 19b-4 isn’t a ‘live’ filing (they believe it is), then ARK was first to file in the latest wave of spot bitcoin ETFs… They’re now first to amend filing in response to recent SEC comments. Why shouldn’t they be first to launch?”
Previously, analysts from Bloomberg anticipated that the SEC might grant approvals to all Bitcoin ETF applications concurrently, eradicating any initial advantage for individual players. Such a blanket approval could stimulate a competitive ambiance amongst ETF contenders.
At press time, BTC rose to $28,000, likely due to the SEC’s decision late Friday.
Featured image from Shutterstock, chart from TradingView.com