The securities and exchange commission (SEC) has refused to file an appeal against the court ruling directing it to reconsider Grayscale’s application for a Bitcoin spot exchange traded fund (ETF).
Reuters reported on Friday that the agency made the decision to not appeal ahead of a midnight deadline to do so. The report also stated that SEC chair, Gary Gensler was silent concerning a possible appeal against the ruling during the day, declining to comment on the matter when questioned by journalists.
A panel of three judges in the U.S. Court of Appeals for the D.C. Circuit had in August ruled that the SEC should review Grayscale’s application to convert its Bitcoin fund to a spot Bitcoin ETF. Grayscale sued the SEC after the agency rejected its application to convert to a Bitcoin spot ETF.
The asset management company sent a letter to the SEC last month asking to meet and discuss the approval of a Bitcoin ETF from the current fund.
“We hope you will agree that the best use of resources now is for the Commission to issue an order approving NYSE Arca’s Rule 19b-4 filing and authorize the staff to work with Grayscale and NYSE Arca to finalize the prompt listing of the Trust’s shares,” lawyers for Grayscale said at the time.
Meanwhile, the SEC has approved several Bitcoin futures ETFs in the past, even though the application procedures were similar to that of Grayscale. The court said that the SEC’s decision to decline Grayscale’s application was arbitrary and had no concrete backing as it has approved Bitcoin futures ETFs based on similar grounds.
More Hurdles Ahead
Despite the SEC’s decision to not appeal the ruling, the director of financial regulation studies at the Cato Institute sees many things to be done before an approval for the ETF is realized.
“It doesn’t mean that that approval is coming quickly and it’s still not a certainty given that the SEC could re-review and deny on different grounds and basically start this legal fight all over again,” Schulp said in a statement on Friday.
CEO of Kraken-subsidiary CF Benchmarks which provides the index set to be used by some of the proposed spot bitcoin ETFs, Sui Chung also said last month that the SEC may be considering other things before an approval. He however also admitted that the confidence is quite high.
“BlackRock, Fidelity, Franklin Templeton, WisdomTree, and the respective stock exchanges, are seeking to list the ETFs,” he said. “They seem pretty confident, otherwise they wouldn’t have filed with what they put into their response. So they seem pretty confident that it will work. But the question is whether the SEC believes it will work.”
High Optimism
Indeed, there’s much more confidence that the SEC is close to approving a Bitcoin spot ETF in the U.S. This confidence has been boosted partly by the recent ruling in favor of Grayscale, even though there’s no green light for any ETF from the SEC yet.
Unlike previous ETF applications, this year’s applications have been followed by a review in which the SEC requested that some adjustments be made to the applications. This is the first time the SEC has made such a request, which is another confidence booster even though it has delayed decisions on the applications.
