Bloomberg analysts say it’s highly likely a Bitcoin (BTC) exchange-traded fund (ETF) will launch by the end of the year, and a near-guarantee by the end of 2024. According to Bloomberg ETF experts James Seyffart and Eric Balchunas, there’s a 75% chance that a spot market BTC ETF will launch by the end of 2023 […]
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Analysts say the best-case scenario is the SEC approves the batch of spot Bitcoin ETFs but it may also exercise its right to an appeal.
The United States Securities and Exchange Commission is facing its first deadlines to decide on seven new Bitcoin (BTC) spot exchange-traded fund applications with the latest being Sept. 4 amid its defeat to Grayscale Investments in a U.S. federal appeals court.
Investment firm Bitwise will learn if its ETF will win the SEC’s approval on Sept. 1 while BlackRock, VanEck, Fidelity, Invesco and Wisdomtree will all be awaiting the SEC’s decision for their funds by Sept. 2, according to several SEC filings.
Meanwhile, Valkyrie is set to hear back from the SEC on Sept. 4.
The U.S. Court of Appeals ruled on Aug. 29 that the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was “arbitrary and capricious” — but it doesn’t mean the SEC must approve Grayscale’s application or others in the future, says Bloomberg ETF analyst James Seyffart.
In an Aug. 29 Bloomberg interview, Seyffart explained Grayscale’s win “definitely” increases the odds of a successful outcome for the next wave of applicants.
He isn’t sure when that day may come though, as the SEC can delay its decisions and has two more proposed deadlines for each fund before being forced to make a final decision on the 240th day post-filing.
For the awaiting applicants, the final deadlines for the SEC are al mid-March next year.
99.99999% of the world doesn't know that the SEC has to decide on 7 BTC ETFs within the next 3 days:
— odin free (@odin_free) August 29, 2023
-blackrock
-bitwise
-vaneck
-wisdomtree
-invesco
-fidelity
-valkyrie
the suits at our doorstep
After today’s ruling in favor of Grayscale, the regulator has 90 days to file an appeal with the U.S. Supreme Court or apply for an En banc review — where a full circuit court can overturn a ruling made by a three-judge panel.
However, the SEC hasn’t made clear what its next move will be.
If the SEC doesn’t appeal the court will need to specify how its ruling is executed which could include instructing the SEC to approve Grayscale’s application, or at the very least revisit it.
Related: BTC price jumps to 2-week highs on Grayscale vs. SEC Bitcoin ETF win
Either way, Seyffart only saw two viable options for the regulator.
The first is for it to concede defeat and approve Grayscale’s conversion of its GBTC to a Bitcoin spot ETF.
Alternatively, the SEC would need to revoke the listing of Bitcoin futures ETFs entirely or deny Grayscale’s application based on a new argument, said Seyffart.
The second potential avenue is to deny on reasons not used before/yet... which i have been saying for months could have to do with Custody or settlement of #Bitcoin which is not something that futures ETFs have to worry about. SEC has made a lot of noise around custodians
— James Seyffart (@JSeyff) August 29, 2023
However, fellow Bloomberg ETF analyst Eric Balchunas considered the odds of the SEC revoking the Bitcoin futures ETFs as “highly unlikely” because of the SEC's reported openness to Ethereum futures ETFs.
Lol, this guy turned the last paragraph of Judge Rao's legal smackdown today into an MGMT-esque sythe banger. Really captures the mood rn, well done.. https://t.co/BBJZR5O6To
— Eric Balchunas (@EricBalchunas) August 29, 2023
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The pending Grayscale ruling could impact the race for an approved spot Bitcoin exchange-traded fund.
Grayscale Investments, which has been seeking to convert its Bitcoin (BTC) trust into a spot Bitcoin exchange-traded fund, could be getting a decision on its lawsuit against the federal securities regulator before the week’s end.
In an Aug. 11 Twitter post, Scott Johnsson, a general partner of Van Buren Capital explained that law clerks in the United States District Courts generally cycle out in August, pushing judges to clear out the caseload “before the new guard arrives.”
He noted that 30 out of 32 cases in March of 2021 and 2022 were heard by United States District Courts within 160 days of oral testimony, which also landed them in August, adding that it has also been 160 days since Grayscale delivered its oral arguments in its suit against the United States Securities and Exchange Commission on March 7.
March '21/'22 cases with decisions within 160 days of oral: 30/32 (94%)
— Scott Johnsson (@SGJohnsson) August 14, 2023
Days since Grayscale (March '23) oral: 160 days
Why should we expect August? Because law clerks for DC generally cycle in/out this month, so judges aim to clear prior caseload before the new guard arrives. https://t.co/vVj0dHus90
As of now, including Grayscale, there are only a small number of unresolved March-argued cases that remain, Johnsson added.
Meanwhile, Bloomberg analyst James Seyffart says the decision could even come as early as Aug. 15, noting the date has been his “theoretical Grayscale lawsuit decision date” for some time.
8/15 has been my theoretical Grayscale lawsuit decision date for a while now but it’s really just an educated guess. I didn’t even do detailed analysis on the court decisions like @SGJohnsson did. But I did a little bit of it and also had convos with @NYCStein about timelines
— James Seyffart (@JSeyff) August 14, 2023
Johnsson added in his thread that Seyffart’s prediction is a “pretty decently good bet.”
Related: An ETF will bring a revolution for Bitcoin and other cryptocurrencies
In June 2022, the U.S. Securities and Exchange Commission rejected Grayscale’s application to convert its GBTC to a spot Bitcoin ETF.
In response, Grayscale sued the securities regulator, saying it was acting arbitrarily by failing to apply consistent treatment to similar investment vehicles.
A number of industry commentators, including ARK Invest's Cathie Wood and ETF analyst Nate Geraci have tipped Grayscale to win the lawsuit.
A lot of noise out there, so here’s my formal prediction on spot bitcoin ETF…
— Nate Geraci (@NateGeraci) August 9, 2023
First, I think Grayscale wins lawsuit.
Second, combo of Grayscale lawsuit win + COIN SSA is enough for SEC approval IMO.
In other words, I think we’re getting a spot bitcoin ETF. Like close to 100%.
Grayscale recently voiced that the SEC should approve all Bitcoin spot ETF applications simultaneously to prevent firms from having an advantage over other applicants.
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