Bitcoin ETF Frenzy at New Heights: When Will the SEC Decide?

The cryptocurrency market recently experienced a surge of excitement as false reports of a Securities and Exchange Commission (SEC) approval for BlackRock’s Bitcoin exchange-traded fund (ETF) sent Bitcoin (BTC) prices soaring to $30,000. This unexpected frenzy underscored the substantial demand for regulated Bitcoin offerings, leaving many observers inquisitive about the SEC’s true intentions.

Adding to the intrigue, SEC Chair Gary Gensler’s position regarding the Grayscale Bitcoin Trust (GBTC) has kept the industry on edge.

What’s the SEC’s Game?

Following the SEC’s unsuccessful appeal of its August court loss in the case of Grayscale’s attempt to convert its Bitcoin Trust (GBTC) into a spot ETF, both Grayscale and the cryptocurrency industry at large find themselves at a crossroads, contemplating their next moves.

A recent interview with SEC Chair Gary Gensler conducted by Bloomberg has triggered a wave of speculation and scrutiny regarding his guarded stance on the status of the Grayscale Bitcoin Trust (GBTC) and other spot Bitcoin ETFs. Legal experts, including noted financial lawyer Scott Johnsson, have chimed in on the implications of a recent DC Circuit ruling and its potential impact on GBTC.

“So the tricky question is how does this order to vacate by the DC Circuit actually impact GBTC?” 

Johnsson highlights the nuanced interpretation of “vacate” about the SEC’s statutory timelines, suggesting that without a clear disapproval order, GBTC could be “deemed approved,” albeit amidst legal complexity. 

GBTC Legal Team Responds

Grayscale’s legal team has conveyed this interpretation to the SEC, urging recognition of their previous application. With the uncertain situation, Johnsson speculates that Grayscale may wield this argument as leverage in ongoing negotiations with the SEC, even though a smoother path might involve refinement.

Gensler’s “Cagey” Response Raises Eyebrows

On a controversial note, Gensler’s responses in the interview, characterized as “cagey,” refrained from providing direct insights into the matter. While he acknowledged the diligent review of multiple filings by agency staff, he avoided divulging specific details.

Gensler emphasized his reluctance to judge outcomes, indicating a deliberate and cautious approach prematurely. Notably, he avoided outlining the SEC’s next steps following last month’s court decision, adding to the uncertainty surrounding GBTC’s status and the broader realm of spot Bitcoin ETFs.

Read More: SEC Should Have Approved Bitcoin ETFs Years Ago: Matt Hougan, Bitwise

Fidelity’s Game-Changing Move

The plot thickened with Fidelity, the asset management giant, submitting an amendment to its proposed spot Bitcoin ETF, known as the Wise Origin Bitcoin Trust, to the U.S. Securities and Exchange Commission (SEC). The filing outlines measures designed to safeguard customers’ Bitcoin in custody accounts and address the risks associated with the uncertain regulatory environment of digital assets, among other considerations.

Moreover, Fidelity joins Ark Invest and Invesco in amending their spot Bitcoin ETF filings. Invesco resubmitted on October 11, with Ark Invest following suit a day later. These moves suggest a continued dialogue between potential ETF providers and the SEC, generating bullish sentiment among traders and market observers.