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SEC Foresakes Appealing Grayscale Ruling: Spot Bitcoin ETF Approval Nears Reality

2 mins
Updated by Ryan James
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In Brief

  • The SEC has chosen not to appeal a court order requiring a review of Grayscale's application to convert its Bitcoin Trust into a spot Bitcoin ETF.
  • This move significantly boosts the likelihood of SEC approval for spot Bitcoin ETFs, with a 90% probability estimated by market experts.
  • Grayscale's GBTC discount has fallen to its lowest point at 15.88%, according to avaialable data.
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The launch of a Spot Bitcoin exchange-traded fund (ETF) edges closer as the U.S. Securities and Exchange Commission (SEC) decided not to appeal an order requesting it to review Grayscale’s application to turn its Bitcoin Trust into an ETF.

This development significantly enhances the chances of SEC approval for spot Bitcoin ETFs, with market observers estimating the possibility at 90%.

SEC Forgoes Appeal to Grayscale’s Case

On October 13, the financial regulator decided against challenging an August ruling requesting it to review Grayscale’s application for a spot Bitcoin ETF.

Grayscale GBTC discount
Grayscale Bitcoin Trust Discount. Source: Coinglass

Speculation surrounding SEC actions has significantly impacted the Grayscale Bitcoin Trust (GBTC) discount, reaching its lowest point this year at 15.88% as of October 13, according to data from Coinglass.

Grayscale and the financial regulator engaged in a long legal dispute concerning spot ETF applications.

The firm contended that the SEC’s rejection of these applications was “arbitrary and capricious,” emphasizing what it saw as “unfair discrimination” against spot Bitcoin ETF issuers.

However, the situation took a turn in August when a U.S. court ruled against the SEC. The court questioned the SEC’s rationale for repeatedly denying spot ETF applications while approving futures ETFs.

The SEC’s argument is rooted in a perceived lack of adequate investor protection in spot BTC ETFs. This has led to the rejection of all such applications during the past decade.

Bitcoin ETF Approval Possibility Jumps to 90%

Meanwhile, Bloomberg analysts have grown more confident about the introduction of spot Bitcoin ETFs in the United States.

According to the analysts, there is a 90% probability that the SEC will approve a spot Bitcoin ETF. The analysts cited the increased interactions between the regulator and a fund sponsor, Ark and 21 Shares, saying:

“This back-and-forth between the SEC and fund sponsors is standard practice for new launches but a first for spot Bitcoin ETF applications, indicating that the SEC is working to approve Ark’s proposal.”

BeInCrypto reported that the analysts had pegged their estimates at 75% following Grayscale’s victory over the regulator in August.

Several asset managers, including BlackRock, have pending applications for a spot bitcoin ETF with the SEC.

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.