Spot Bitcoin ETF Takes Giant Step Toward Approval

SEC opts to not appeal ruling favorable to Grayscale, opening door wider to 'spotcoin' ETF.

LucyBrewster310x310
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Finance Reporter
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Reviewed by: etf.com Staff
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Edited by: Ron Day

The Securities and Exchange Commission’s Oct. 14 deadline to appeal Grayscale’s watershed court victory came and went Friday, a signal to eager crypto investors that approval for a so- called “spotcoin” could be imminent.

In a momentous decision on Aug. 29, the court said the SEC’s blocking of the Grayscale Bitcoin Trust into an ETF was “arbitrary and capricious.” Crypto ETF hopefuls saw Grayscale’s victory as a boon—not only because of how the court’s ruling would shape the regulatory environment, but also because the decision was unanimous. Three judges from varied political backgrounds all sided with Grayscale.

Now, the SEC could approve Grayscale’s trust conversion, or ask the firm to refile, which could extend the process another few months, according to ETF analyst at Morningstar Bryan Armour.

“The SEC recognized that it had no legitimate basis for appealing the ruling and that it would ultimately lose that appeal and cause further indignation, not only within the crypto community but within Congress,” said Ric Edelman, founder of the Digital Assets Council of Financial Professionals

SEC Decision on Grayscale Heats Up Spot Bitcoin Race 

A slew of firms, including traditional finance players BlackRock and Fidelity, are also seeking regulatory approval for spot bitcoin ETFs. Last week, asset managers including ARK Invest refiled their applications after dialogue with the agency, another sign the regulatory body is preparing to approve the filings.

Yet exactly when, and in what order, the various firms will win approval remains unclear. While Bloomberg analysts give spot bitcoin ETFs a 90% chance of approval before Jan. 10, the SEC could still extend the process, Armour said.

“The expectation would be that the SEC would have to re-review [the Grayscale bid] in a certain set amount of time—at which point, it could still reject it on different grounds or choose to accept it,” he noted.

The mounting consensus is that the agency will approve multiple filings at once, though it could instead choose to greenlight the ETFs of traditional finance firms.  

Bitcoin Surges, then Falls on Fake BlackRock Tweet

One sign of investor sentiment appeared on Mon., Oct. 16, when a false report surfaced on Twitter/X that BlackRock’s spotcoin bid was approved. The price of bitcoin leapt to $30,000, indicating that investors are closely watching the ETF race.  

Whether the false report misinterpreted other cryptocurrency news or purposefully manipulated the market, it’s clear crypto followers have high stakes in these ETFs hitting the market.  

“There’s a huge pent-up demand for a spot bitcoin ETF, and there’s a very common view that it would cause the price of bitcoin to rise significantly,” said Edelman.  

Contact Lucy Brewster at [email protected].  

Lucy Brewster is a finance reporter at etf.com covering asset managers, emerging technologies, and regulation. She hosts etf.com webinars and appears on Exchange Traded Fridays, etf.com’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.