Bitcoin Spot ETF New Development: GBTC may get a response from the SEC within 2 weeks, and several institutions update their prospectuses

By Nancy, PANews

Recently, Reuters reported that the SEC does not plan to appeal the Grayscale ruling. Meanwhile, the Grayscale team claims to be ready to convert GBTC into an ETF. For a time, the market’s expectations for the SEC’s approval of the Bitcoin spot ETF were full. So, does this mean that the SEC is about to approve Grayscale’s application? When will the Bitcoin Spot ETF be launched?

SEC waives appeal** but **** still has other reasons to refuse, or respond within 2 weeks**

In June 2022, after being rejected by the SEC to convert its GBTC into a Bitcoin spot ETF, Grayscale filed a lawsuit and won the SEC lawsuit in August this year, and the US federal appeals court asked the SEC to review Grayscale’s application to convert GBTC to ETF. While Grayscale ushered in a phased victory, the SEC still has a chance to appeal the ruling. But as the 45-day deadline for seeking a retrial under the Federal Rules of Procedure has passed, the SEC did not file an appeal deadline, which greatly increased the likelihood of GBTC converting to an ETF. At the same time, Grayscale said that the team also said it was ready to convert the GBTC to an ETF once it received SEC approval.

But that doesn’t mean the SEC will approve Grayscale’s conversion of GBTC into a Bitcoin spot ETF.

On the one hand, the United States is financially tight, and recently there was a shutdown crisis due to the budget spending bill. According to estimates by the Federal Budget Accountability Committee, an independent research organization, the federal deficit in the United States could double from fiscal year 2022 in fiscal year 2023, which ends at the end of September. The budget is one of the important sources of funding for the SEC, and Gary Gensler also requested an additional $109 million for his agency’s enforcement budget at the U.S. Senate Appropriations Committee in July.

On the other hand, in the lawsuit against Grayscale, the key point of the SEC’s defeat was the former’s accusation of double standards with respect to Bitcoin spot and derivatives, while approving similar Bitcoin futures ETFs. That is, the SEC can still reject Grayscale’s application on other grounds. At the same time, not long ago, the SEC delayed applications for bitcoin spot ETFs such as BlackRock, Fidelity, WisdomTree, and VanEck before the US government shut down.

In addition, after Grayscale won the case, the GBTC premium continued to narrow. As of Friday, GBTC’s negative premium rate has narrowed to 15.87%, reaching its lowest level since late December 2021, after hitting a record low of nearly 50% in December, indicating that the market’s optimism about GBTC’s conversion into a Bitcoin spot ETF continues to grow. However, judging from the trend of bitcoin in the past two months, the important positive of grayscale has not brought a continuous heating up to the market, and market funds or expectations for GBTC conversion into bitcoin spot ETFs are limited.

According to Fox reporter Eleanor Terrett on Twitter, if the SEC does not appeal, the case will be closed seven days from now, and Grayscale can begin working with SEC staff to initiate the approval process for the Bitcoin spot ETF. Grayscale will then work with the SEC’s Corporate Finance and Transactions & Markets division. According to Bloomberg analyst James Seyffart, the SEC may make a rejection/approval action on the GBTC conversion in the next 2 weeks. Bitwise, VanEck, Fidelity and Valkyrie will also face a second review from the SEC. (Related: Latest version |.) One picture to grasp the key time nodes for the application review of each Bitcoin spot ETF)

Bitcoin spot ETF with bipartisan support and 90% chance of approval in January next year

Although it is unclear when the grayscale GBTC will be approved, the Bitcoin spot ETF has received bipartisan support. Last month, four members of the U.S. House of Representatives signed a letter to the SEC chairman urging him to “immediately” approve spot bitcoin ETFs, both Republicans and Democrats, two of whom are members of the House Congressional Blockchain Caucus.

“Spot Bitcoin ETP is no different from Bitcoin futures ETP, the SEC’s current attitude is untenable, and regulated spot Bitcoin ETFs will enhance investor protection by making Bitcoin access more transparent and secure,” the letter reads. According to the appeals court’s ruling, there is no reason for the SEC to continue to reject such applications on inconsistent and discriminatory criteria. ”

It can be said that the two parties share a common intention to launch a Bitcoin spot ETF. Gary Gensler, while participating in a hearing before the U.S. House Financial Services Committee in late September, also said that officials are working with agency officials on spot bitcoin ETFs.

It is worth mentioning that ARK Invest and Invesco Galaxy have recently submitted updated versions of the Bitcoin spot ETF prospectus, and other applicants are expected to update the documents soon.

In response, Bloomberg ETF analysts Eric Balchunas and James Seyffart said that this indicates a constructive dialogue with the SEC, and this step is usually only 90% likely that we believe spot bitcoin ETFs will be approved before Ark’s January 10 application deadline. The updated prospectuses of Ark and 21Shares have a number of minor changes, including new language, further context and additional risk disclosures. This back-and-forth between the SEC and fund sponsors is standard practice for new product offerings, but it is a first for a spot Bitcoin ETF filing, suggesting that the SEC is working to approve Ark’s application. The SEC is the disclosure regulator that aims to ensure that critical information, including potential risks, is properly disclosed, but should not overthink the advantages and disadvantages of an investment. This will only happen if the ETF is about to be approved. ”

In short, whether the GBTC can be smoothly converted in a short period of time still needs to wait for SEC approval, but the approval of the Bitcoin spot ETF may only be a matter of time.