The US Appeals Court has issued a decision requiring the SEC to reconsider its proposal to convert Grayscale Investments’ GBTC fund into a spot bitcoin ETF. This decision comes after the SEC stated last week that it had no intention of appealing the ruling. While Grayscale has made a new application for the fund, it remains uncertain whether the SEC will reject the application for other reasons.
In accordance with the order submitted on Monday, which is based on the ruling dated August 29, 2023, and under Federal Appellate Procedure Rule 41, this constitutes the court’s official order.
The order takes into account the court’s stance on the SEC’s treatment of spot Bitcoin ETFs and Bitcoin futures ETFs, reaffirming the August ruling. The court states that Grayscale’s proposed Bitcoin ETF is similar to the existing and approved Bitcoin futures ETFs. Consequently, it emphasizes that these two ETFs should have the same probability of detecting fraudulent or manipulative behavior in the Bitcoin and Bitcoin futures markets.
Grayscale Continues to Progress
On Thursday, Grayscale took another step forward. It filed a new registration statement through an S-3 filing, which is a shortened version of the typical S-1 filing used to offer new shares to investors.
In addition to Grayscale, other major asset managers such as BlackRock and Fidelity are also awaiting approval from the SEC for Spot Bitcoin ETFs. Chairman Gary Gensler stated on Wednesday that the agency’s staff is reviewing multiple proposals. Interestingly, when asked about Grayscale by a reporter, he declined to comment and added the following:
We have not just one but multiple filings before us, I think there are eight or ten filings that our staff is reviewing. When an asset manager wants to bring something to market, these products that trade on exchanges have to be registered with the SEC and go through a filing process like an IPO. So, our Division of Corporation Finance is the one that responds to and provides feedback to potential issuers. Our Division of Trading and Markets also reviews the filings, of course. It’s a process that goes back decades and has been tested over time. Our staff calls it the Review and Comment Team, but they respond to and provide feedback to potential issuers.
