Bloomberg’s senior ETF analyst Eric Balchunas mention that a potentially significant SEC decision regarding Grayscale Investments could be revealed today, August 15, or Friday, August 18 at the latest.
This decision is likely to have notable implications for the approval of Bitcoin exchange-traded products (ETPs), with all eyes on Blackrock’s recent filing alongside countless others who followed suit and added Coinbase as a partner under a “surveillance sharing” agreement’.
Grayscale challenged the SEC’s refusal to approve its Bitcoin ETP application, calling for a fair and consistent approach across all issuers. The controversy stems from the SEC’s acceptance of leveraged Bitcoin futures ETFs while rejecting spot Bitcoin ETF applications, a decision Grayscale considers inconsistent and arbitrary. Today’s pending announcement indicates the focal point of this ongoing dispute.
Grayscale influence on spot Bitcoin ETFs
Grayscale’s allegation with the SEC is tied to its ownership interests and has wider implications for the crypto industry. The company initially applied to list the Grayscale Bitcoin Trust (GBTC) on the NYSE Arca exchange, a request rejected by the SEC in 2022. Grayscale responded with a legal challenge, arguing that the SEC’s approval of Bitcoin futures ETFs while denying mock Bitcoin ETF applications represents an apparent policy inconsistency.
Multiple asset managers, including BlackRock, ArkInvest, and VanEck, recently filed spot Bitcoin ETP filings with the SEC. These documents detail the intended surveillance-sharing agreements with crypto exchange Coinbase, a move that some believe could be key to SEC approval.
However, Grayscale emphasizes that sharing oversight with an unregulated platform like Coinbase is not enough to meet the criteria for approving a Bitcoin ETP based on previous SEC indications.
According to Bloomberg senior legal analyst, the final decision on Grayscale’s case has a 70% chance of being favorable. Nevertheless, he advises stakeholders to prepare for any outcome, reinforcing the idea that certainty is an elusive luxury in the digital asset realm.
Timeline and outliers for decisions
Intriguingly, Balchunas shared a message from Scott Johnson, a financial attorney, who sheds light on the possible timeline for Grayscale’s case. According to Johnsson, 94% of cases brought in March 2021 and 2022 received a decision within 160 days of pleadings. Currently, 160 days have passed since Grayscale’s plea in March 2023, suggesting a verdict is imminent.
Johnsson also highlights the typical procedure of D.C. attorneys cycling in and out in August, urging judges to clear their workload before the new incumbents arrive. Given this pattern, he suggests we can expect a decision in August.
He also noted that all March 2022 cases argued before the DC Circuit were decided within 154 days, with the exception of a single outlier after 170 days. This reinforces the rationale behind expecting a decision soon.
While awaiting the SEC’s decision on Grayscale’s case, these observations provide crucial context for the likely timing, highlighting how regulatory norms and procedural routines can drive our expectations in the ever-unpredictable cryptosphere.
Editor’s Note: This article will be updated as more news becomes available.