The DC Circuit Court unleashed a seismic ruling yesterday, pushing Grayscale Investments to a resounding victory in an exciting twist that has sent shockwaves through the Bitcoin sphere. The decision unceremoniously overturned the Securities and Exchange Commission’s (SEC) previous rejection of Grayscale’s daring Bitcoin spot ETF proposal. This legal thunderclap brings in an exciting new chapter in the long-running Bitcoin spot ETF saga, leaving experts speculating about impending timescales and unexpected consequences.
The Blockchain Association’s Chief Policy Officer, Jake Chervinsky, lauded the significance of this historic decision, calling it a “massive” move. He emphasized that seeing a federal circuit court flag the SEC for violating the Administrative Procedure Act (APA) was as rare as seeing a shooting star. Chervinsky stated unequivocally, “The DC Circuit firmly rebuffed the SEC’s notion that Grayscale’s ETF blueprint lacked the firepower to thwart fraudulent machinations and manipulative tactics.”
Surprisingly, the court did not order outright approval of the proposal; instead, it staged a careful study of Grayscale’s petition, informed by its momentous decision. Chervinsky successfully crafted two speculative scenarios that capture Wall Street’s interest as he delves into the possibilities ahead.
One intriguing scenario includes the SEC uncovering even another reason to reject the idea, evoking their deep distrust of the crypto universe. In contrast, the SEC may view this as a semi-graceful retreat from their anti-ETF stance, especially given rising pressure from the traditional financial elites, who are now vying for a piece of the Bitcoin ETF pie. This year has seen a flood of ETF ideas, notably from well-known firms such as Blackrock, where Larry Fink’s considerable influence is felt. Legal eagles speculate:
“The million-dollar question is whether the SEC wants to go through this again.” Mark my words: another refusal would almost certainly result in another lawsuit. My sincere advice to the SEC is to act sooner rather than later. “The timer is ticking.”
A seasoned ETF analyst, Bloomberg Intelligence’s James Seyffart confirmed the ruling’s significance. “This ruling is a comprehensive rebuke of the SEC’s unyielding streak in rejecting Bitcoin ETF petitions,” he said. However, Seyffart emphasized the court’s poker face regarding precise timetables for the SEC’s next act.
“I had my money on a 45 or 60-day countdown, but the court’s voice is deafeningly silent on that front,” Seyffart speculated. Nonetheless, he correctly pointed out the SEC’s 45-day timeframe to request an en banc hearing—a forum in which all 17 court justices weigh in, going beyond the first trio of panel judges.
Seyffart provided a binary image of the SEC’s potential steps to thwart Bitcoin spot ETFs: a purposeful withdrawal of Bitcoin Futures ETF listings or a new wave of denials, presumably centred on custody or settlement issues. These ideas have been echoed in the SEC’s Staff Accounting Bulletin 121 (SAB 121).
Adam Cochran, a seasoned CEHV associate, skillfully added another layer of mystery to the temporal labyrinth. He alluded to the looming sword of Damocles, implying that the SEC’s decisions on six other Bitcoin spot ETF filings will be based on the balance. Bitwise begins the countdown on September 1, followed by BlackRock and Fidelity on September 2. Cochran’s prediction was confirmed:
“Those expecting a torrential ETF downpour this Friday may be in for a rude awakening.” We’re probably preparing for an autumnal approval timeframe, maybe running into November. That is until the SEC dons its armour for an appeal, we may have to wait till spring.”
In conclusion, the court’s thunderous judgment represents a massive victory for Grayscale and the crypto universe. Nonetheless, this historic victory does not guarantee an automatic Bitcoin spot ETF approval. The SEC is at a fork in the road, with difficult decisions ahead, fueled by a complicated mix of legal, political, and market forces.
BTC is worth $27,466 at the time of writing, representing a 5.3% increase in the last 24 hours. The crypto tides continue to rise as the big conflict between innovation and regulation plays out.